Journal Articles

Permanent URI for this collectionhttps://mro.massey.ac.nz/handle/10179/7915

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Subject: search.filters.subject.1501 Accounting, Auditing and Accountability

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Now showing 1 - 10 of 25
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    The Effect of Corporate Sustainability Performance on Leverage Adjustments
    (Elsevier, 2021-01-30) Ho L; Bai M; Lu Y; Qin Y
    We examine the impact of corporate sustainability performance (CSP) on the speed at which firms adjust their leverage ratios to the target levels for a large sample of 31 countries from 2002 to 2018. Using two proxies of CSP, we find that firms with superior CSP tend to adjust faster toward their target leverage ratios. In exploring the potential underlying economic mechanisms through which CSP affects leverage adjustments, we find that better CSP helps firms to ease information asymmetry, enhance stakeholder engagement, push up stock prices in the stock market, and improve competitive advantage in the product market. In the cross section, the positive association between CSP and leverage adjustment speed is less pronounced in countries with high-quality institutions. The results remain unchanged in robustness tests. Overall, this paper highlights the important role of CSP in shaping corporate capital structure dynamics and suggests implications for corporate strategic planning on the privately optimal levels of CSP activities.
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    Do auditors respond when listed firms pledge shares? Evidence from China
    (2023-10-25) Kong KM; Huang HJ
    Purpose: This paper investigates whether the audit fees of Chinese listed firms are associated with the share pledging practice of the firm’s controlling shareholders. Design/methodology/approach: This study uses the audit pricing model to estimate the association between the share pledging of listed firms and audit fees. Cross-sectional analysis is conducted on a large sample of Chinese listed firms during the period 2004 to 2019. The authors further test the moderating effects of listing on the Main Board, state ownership and abnormal audit report lag on the association between share pledging and audit fees. The results remain robust to various endogeneity tests including two-stage least squares instrumental variable analysis, entropy balancing analysis and difference-in-difference analysis. Findings: The study finds that audit fees are positively associated with the proportion of shares pledged by the listed firm’s controlling shareholder in China. The results also provide new evidence that the positive association between audit fees and the share pledging of controlling shareholders could be mitigated if the firm is listed on the Main Board and/or it is a state-owned enterprise. In contrast, pledged firms with abnormal audit report lag are found to have higher audit fees than their pledged counterparts without the excessively long audit delay. Practical implications: Findings of this study have important practical implications to those charged with governance, as boards need to comprehensively understand the adverse consequences of share pledging when pursuing it as the firm’s major source of financing. The study also has policy implications for stock market regulators such as the China Securities Regulatory Commission in China. Regulators could consider developing a threshold-based share pledging disclosure and pledge ratio requirements based on factors such as a firm’s listing status and ownership structure. Originality/value: This study provides new evidence on the audit-related consequences of share pledging in a significant capital market. Findings of this study also enrich the existing audit literature by introducing the share pledging activities of controlling shareholders into the audit pricing decision-making model.
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    Does one size fit all? Environmental reporting in New Zealand: the perspective of configuration theory
    (1/01/2023) Perera A
    Purpose: This study aims to examine how different combinations of firm determinants enhance environmental reporting (ER) in New Zealand. Design/methodology/approach: This study collects data from annual and sustainability reports of 145 listed companies in New Zealand. This study uses content analysis to examine the extent of ER and then the fuzzy set qualitative comparative analysis (FsQCA) to determine the configurations of determinants of reporting. Findings: The findings reveal ten configurations of determinants showing that ER relies on the existence or non-existence of other firm determinants such as firm size, profitability, ownership and presence of an environment committee (EC). Among ten configurations, ER*∼ROE (ROE denotes return on equity; firms with no profitability but with ECs) stands out, indicating that ER is strongly influenced by the presence of an EC when no profitability exists. Research limitations/implications: The configuration analysis in this study extends the current ER literature. Practical implications: The findings provide insight into the management to look for new paths when they make environmental-related strategies based on the existence and non-existence of firm determinants. The findings also support policymakers considering multiple combinations of criteria when mandating ER to promote better climate risk reporting in New Zealand. Originality/value: Previous studies on determinants of ER mainly use regression analysis to analyse their data. In contrast, the current study uses configuration analysis.
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    Ladder of analytical abstraction: a constructive map for data analysis a case of voluntary reporting of human capital
    (4/05/2023) Perera A; Rainsbury L
    Purpose: This study aims to demonstrate how Carney’s ladder of analytical abstraction is used to examine the motivations of banks for reporting human capital (HC) information. Design/methodology/approach: The authors use semi-structured interviews of senior bank employees at eight large New Zealand banks. They analyse the managers’ views using a constructive mapping of responses applying Carney’s ladder of analytical abstraction. The findings are interpreted from a stakeholder theory perspective. Findings: The authors find that the New Zealand banks report on HC to manage reputation, strengthen employee relationships and achieve competitive advantages. The results suggest that banks engage in opportunistic reporting to distract external stakeholders while advancing their interests. Research limitations/implications: The study will guide researchers in the use of Carney’s ladder of analytical abstraction in analysing qualitative data. Practical implications: This study provides insights for businesses to improve the consistency and quality of HC reporting and ensure that the information needs of broader stakeholder groups are met. Originality/value: Some previous voluntary reporting studies analyse their data using inductive analysis. The authors use Carney’s ladder of analytical abstraction as a framework to guide our inductive analysis.
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    A contingency-based accountability and governance framework for the non-profit sector in the post-COVID-19 era
    (2023-01-09) Huang HJ
    Purpose: The COVID-19 global pandemic has caused significant disruptions to the non-profit sector, highlighting the issues that the narrowly focused, traditional conception of governance fails to address. The purpose of this paper is to propose a contingency-based framework with its theoretical underpinnings in the existing literature, in order to support future empirical research on non-profit governance and accountability practices. Design/methodology/approach: From a theoretical perspective, this paper synthesizes relevant existing literature and proposes a contingency-based accountability and governance framework in the non-profit sector. This paper draws on Ostrower and Stone’s (2010) contingency-based framework on boards and Hyndman and McDonnell’s (2009) conception of governance systems. This paper engages with the New Zealand and Australia context while reviewing relevant literature and relevant regulations. Findings: The global pandemic has caused severe worldwide disruptions both socially and economically. There have been dramatic changes to the ways in which non-profit organisations (NPOs) operate. There is an urgent need to understand how such changes in the external environment impact on NPOs’ governance and accountability practices. In this context, the contingency-based accountability and governance framework proposed in this paper has important implications for non-profit research, while opening up an avenue for future research in this field. Research limitations/implications: This paper does not involve empirical analysis. Practical implications: This paper contributes by facilitating better understanding on how external contingencies like the COVID-19 global pandemic affect the external and internal environment of an NPO, how they impact on stakeholders and their interplay with an NPO’s governance and accountability systems. It also suggests that regulators of the non-profit sector, umbrella support organisations, and funders proactively encourage and guide NPOs to embrace a wider scope of governance and strengthen the level of governance in the sector. Originality/value: This paper contributes to the literature by proposing a contingency-based accountability and governance framework in the non-profit sector to support future research in this field. It also sheds light on competing theoretical debates relating to the conceptualisation and operationalization of accountability and governance.
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    The Predictive value of bank fair values.
    (Elsevier, 1/02/2017) Ehalaiye D; Tippett M; van Zijl T
    Fair value, the value of an item in an orderly exchange, has been shown to have greater value relevance than historical cost. However, there is limited literature on the predictive ability of fair value. Our study contributes to this emerging area of research by examining the predictive ability of the SFAS 107 fair value disclosures by U.S. banks for future performance as measured by operating cash flows and earnings over a three-year time horizon. Furthermore, we provide evidence on the influence of the 2007/2008 Global Financial Crisis (GFC) on the relationships between bank fair values and future performance, thereby showing whether market illiquidity affected the underlying relationships. We also test for the impact of bank characteristics - size, capital adequacy and growth prospects - on predictive ability. Our findings suggest that fair values have predictive ability for both the cash flow and earnings measures of performance and that the GFC did not have an adverse impact on the predictive ability of bank fair values. However, we find that the predictive ability of fair value is strongest for operating cash flows. The study supports the relevance of fair value, as indicated by predictive ability for performance, and thus makes an important contribution to the fair value accounting literature and accounting standard-setting
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    Face-to-face delivery this week; online the next: a reflection
    (Emerald, 23/08/2021) Perera A; Rainsbury L; Bandara S
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    Evidence on the costs of changes in financial reporting frameworks in the public sector
    (Taylor and Francis Group, 1/09/2019) Botica Redmayne N; Laswad F; Ehalaiye D
    This paper examines the impact of changes in reporting frameworks on New Zealand public sector audit costs in terms of both audit fees and effort. Audit costs increased with the adoption of both International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSAS) reporting frameworks. The costs of auditing across various financial reporting frameworks in the public sector is shown to be significantly influenced by auditors’ specialization.
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    Insights into accounting choice from the adoption timing of International Financial Reporting Standards
    (Blackwell Publishing, 2015) Stent W; Bradbury ME; Hooks J
    This paper collects survey evidence on the costs and benefits of adopting International Financial Reporting Standards (IFRS). It also examines the motivations for the timing of IFRS adoption. Significant differences exist between early and late adopters for three of nine benefits and for one of six cost measures. No significant differences exist in terms of firm size or the impact of IFRS on contracts. Early adopters perceive themselves as market leaders. They are more certain about the manageability of implementing IFRS and are more specific with regard to the impact of IFRS adoption. Late adoption decisions are motivated by adverse consequences and uncertainty.
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    The value of discretion in Africa: Evidence from acquired intangible assets under IFRS 3
    (World Scientific Publishing Company, 2020-06) Tunyi A; Ehalaiye D; Gyapong E; Ntim C; Chaney, PK
    This paper examines the value of managerial discretion in financial reporting by exploring the value relevance of intangible assets acquired in business combinations (AIA) before and after the 2008 International Financial Reporting Standard (IFRS) 3 amendment. The 2008 IFRS 3 amendment gave managers the discretion to recognize previously unrecognized intangibles in the target firm, hence, we posit that if managerial discretion improves the quality of financial reporting, we should observe an increase in the value relevance of AIA after the amendment. Our empirical analysis is based on a dataset of 603 mergers announced between 2004 and 2016, across seven African countries. Consistent with our main hypothesis, we find that the value relevance of AIA, predominantly acquired goodwill (AGW), increased after the amendment, suggesting that managerial discretion improves the quality of financial information. Our results further show that the value of discretion is moderated by the underlying institutional quality, with the value relevance of AIA being greater in high-quality institutional contexts. Our findings are robust to alternative measures of AIA, alternative models for testing value relevance, and various controls for endogeneity. Overall, our findings have important implications for accounting standard-setters, governments, investors, and practitioners.