Journal of Financial Reporting and Accounting最新文献

{"title":"Governance mediation in the era of disruptive technologies: unveiling new perspectives on the risk of material misstatements","authors":"Marwa Elnahass, Xinrui Jia, Louise Crawford","doi":"10.1108/jfra-11-2023-0643","DOIUrl":"https://doi.org/10.1108/jfra-11-2023-0643","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to examine the mediating effects of corporate governance mechanisms like the board of directors on the association between disruptive technology adoption by audit clients and the risk of material misstatements, including inherent risk and control risk. In particular, the authors study the mediating effects of board characteristics such as board size, independence and gender diversity.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Based on a sample of 100 audit clients listed on the FTSE 100 from 2015 to 2021, this study uses structural equation modelling to test the research objectives.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The findings indicate a significant and negative association between disruptive technology adoption by audit clients and inherent risk. However, there is no significant evidence observed for control risk. The utilisation of disruptive technology by the audit client has a significant impact on the board characteristics, resulting in an increase in board size, greater independence and gender diversity. The authors also find strong evidence that board independence mediates the association between disruptive technology usage and both inherent risk and control risk. In addition, board size and gender exhibit distinct and differential mediating effects on the association and across the two types of risks.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>The study reveals that the significant role of using disruptive technology by audit clients in reducing the risk of material misstatements is closely associated with the board of directors, which makes audit clients place greater emphasis on the construction of effective corporate governance.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study offers essential primary evidence that can assist policymakers and standard setters in formulating guidance and recommendations for board size, independence and gender quotas, ensuring the enhancement of effective governance and supporting the future of audit within the next generation of digital services.</p><!--/ Abstract__block -->\u0000<h3>Social implications</h3>\u0000<p>With respect to relevant stakeholders, it is imperative for audit clients to recognise that corporate governance represents a fundamental means of addressing the ramifications of applying disruptive technology, particularly as they pertain to inherent and control risks within the audit client.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study contributes to the existing literature by investigating the joint impact of corporate governance and the utilisation of disruptive technology by audit clients on inherent risk and control risk, which has not been investigated by previous research.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"44 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140595774","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The mediating effect of bank risk on the relationship between diversification strategies and discretionary loan loss provisions","authors":"Mouna Ben Rejeb, Nozha Merzki","doi":"10.1108/jfra-07-2023-0428","DOIUrl":"https://doi.org/10.1108/jfra-07-2023-0428","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to investigate the effect of income and asset diversification on earnings management using discretionary loan loss provisions (LLP) in banks, and the role of risk level in mediating this effect.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>A sample of banks operating in Middle East and North Africa countries was used to test the mediation model of Baron and Kenny (1986) with different measures of diversification and risk.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results show that bank income and asset diversification have unique and combined effects on earnings management. The results also support the idea that a risk-mediating effect contributes to explaining this relationship among banks. Specifically, bank diversification strategies positively affect LLP-based earnings management by increasing bank risk. This result is relevant for conventional banks. However, only a direct and positive effect of diversification strategies on LLP-based earnings management can be observed in Islamic banks, and the indirect effect is not supported.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study extends previous research by examining the unique and combined effects of income and asset diversification strategies on earnings management in the banking sector. Specifically, it provides new evidence that diversification strategies increase LLP-based earnings management, both directly and indirectly, through bank risk.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"68 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140595871","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Dynamic dependency between health-care sector and Islamic industry: before, during and after COVID-19 lockdown evidences","authors":"Sana Braiek, Houda Ben Said","doi":"10.1108/jfra-09-2023-0557","DOIUrl":"https://doi.org/10.1108/jfra-09-2023-0557","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to empirically explore and compare the dynamic dependency between health-care sector and Islamic industries before, during and after the COVID-19 pandemic.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Time-varying student-<em>t</em> copula is used for before, during and after COVID-19 periods. The data used are the daily frequency price series of the selected markets from February 2017 to October 2023.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Empirical results found strong evidence of significant impact of the COVID-19 pandemic on the dependence structure of the studied indexes: Co-movements between various sectors are certain. The authors assist also in the birth of new dependence structure with the health-care industry in response to the COVID-19 crisis. This reflects the contagion occurrence from the health-care sector to other sectors.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>By specifically examining the Islamic industry, this study sheds light on the resilience, challenges and opportunities within this sector, contributing novel perspectives to the broader discourse on pandemic-related impacts on economies and industries. Also, this paper conducts a comprehensive temporal analysis, examining the dynamics before, during and after the COVID-19 lockdown. Such approach enables an understanding of how the relationship between the health-care sector and the Islamic industry evolves over time, accounting for both short-term disruptions and long-term effects. By considering the pre-pandemic context, the paper adopts a longitudinal perspective, enabling a deeper understanding of how historical trends, structural factors and institutional frameworks shape the interplay between the health-care sector and the Islamic industry.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"5 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-04-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140595772","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Effect of audit client’s use of blockchain technology on auditing accounting estimates: evidence from the Middle East","authors":"Hamada Elsaid Elmaasrawy, Omar Ikbal Tawfik, Abdul-Rashid Abdul-Rahaman","doi":"10.1108/jfra-08-2023-0499","DOIUrl":"https://doi.org/10.1108/jfra-08-2023-0499","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to examine the effect of audit client’s use of blockchain (BC) on auditing accounting estimates (AEs), especially the inherent risk (IR), control risk (CR) and collection of audit evidence.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The study used a questionnaire to collect data for a sample of 249 auditors. A partial least squares method is used to test the hypotheses.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results showed positive relationship between audit client’s use of BC and both IR and CR when auditing AEs. The results also showed the BC improves the collection of sufficient and appropriate audit evidence when auditing AEs.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>This study did not address all the risks associated with auditing AEs, including fraud, detection, sampling and nonsampling risks, and the procedures and tests for auditing AEs.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>There are several implications of this research, including that it informs the revision of auditing standards and guidelines to correspond with successive technological changes, which subsequently clarify the roles and responsibilities of auditors, and the study findings will also cause changes to the design and form of audit procedures so as to obtain sufficient and appropriate audit evidence.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of the authors’ knowledge, this study is considered the first of its kind that deals with the effects of audit client’s use of BC on audit AEs in the Middle East and North Africa region. This study also presented different sets of measures as proxies for measuring IR, CR and AE.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"2 1 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140595660","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Management’s tone change in MD&A and tax avoidance","authors":"Yicheng Wang, Brian Wright","doi":"10.1108/jfra-01-2024-0005","DOIUrl":"https://doi.org/10.1108/jfra-01-2024-0005","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this paper is to explore how variations in management’s tone within management’s discussion and analysis (MD&amp;A) sections of 10-K reports can serve as an indicator of tax avoidance and highlight the complex relationship between such linguistic shifts and the tax avoidance decisions within firms.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The paper uses a textual analysis approach to identify linguistic cues in MD&amp;A sections of 10-K filings related to tax avoidance, going beyond traditional quantitative measures. The study uses differences in negative word occurrences in MD&amp;A to measure management’s tone change and examines various measures of tax avoidance. The sample covers the period from 1993 to 2017 and comprises all firms with 10-K filings available on EDGAR, totaling over 30,000 firm-year observations.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The findings indicate a complementary relationship between tax avoidance and other drivers of firm performance. When firms have more negative management’s tone, they are less willing to engage in tax avoidance and vice versa. The study’s approach with management’s tone change provides a different and statistically significant improvement in model fit for detecting tax avoidance.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This paper provides actionable insights for detecting tax avoidance through the analysis of management’s tone in corporate disclosures, offering a new tool for researchers, investors and tax authorities. It highlights the importance of linguistic cues as indicators of tax avoidance behavior, complementing traditional financial metrics.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The paper contributes to the literature by using management’s tone change as a time-varying factor to explain tax avoidance behavior. It uncovers a larger set of linguistic cues in MD&amp;A that can be used to detect tax avoidance. This research provides a complementary approach to traditional quantitative tax avoidance measures and offers insights into the overall relationship between tax avoidance and firm performance, going beyond one-dimensional measures typically used in prior literature.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"18 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140200664","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Capital market effects of integrated reporting quality: evidence from South African context","authors":"Nawar Boujelben, Manal Hadriche, Yosra Makni Fourati","doi":"10.1108/jfra-06-2023-0314","DOIUrl":"https://doi.org/10.1108/jfra-06-2023-0314","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this study is to examine the interplay between integrated reporting quality (IRQ) and capital markets. More specifically, the authors test the impact of IRQ on stock liquidity, cost of capital and analyst forecast accuracy.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The sample consists of listed firms on the Johannesburg Stock Exchange in South Africa, covering the period from 2012 to 2020. The IRQ measure used in this study is based on data from Ernst and Young. To test the proposed hypotheses, the authors conducted a generalized least squares regression analysis.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The empirical results evince a positive relationship between IRQ and stock liquidity. However, the authors did not find a significant effect of IRQ on the cost of capital and financial analysts’ forecast accuracy. In robustness tests, it was shown that firms with a higher IRQ score exhibit higher liquidity and improved analyst forecast accuracy. Additional analysis indicates a negative association between IRQ and the cost of capital, as well as a positive association between IRQ and financial analyst forecast accuracy for firms with higher IRQ scores (TOP ten, Excellent, Good).</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The study stands as one of the initial endeavors to investigate the impact of IRQ on the capital market. It provides valuable insights for managers and policymakers who are interested in enhancing disclosure practices within the financial market. Furthermore, these findings are significant for investors as they make informed investment decisions.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"80 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140154967","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The impact of environmental, social and governance (ESG) reporting on corporate profitability: evidence from Thailand","authors":"Sirimon Treepongkaruna, Muttanachai Suttipun","doi":"10.1108/jfra-09-2023-0555","DOIUrl":"https://doi.org/10.1108/jfra-09-2023-0555","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The United Nations' sustainable development goals (SDGs) put together a global framework in an attempt to address environmental, social and governance (ESG) concerns. Measuring a company’s contribution to the SDGs relies heavily on ESG reporting. This paper aims to examine the impact of ESG reporting on the corporate profitability of listed companies in Thailand over the period of 2019–2021.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using 147 listed firms in the ESG group, content analysis was used to quantify the ESG reporting (within 11 themes), while corporate profitability was measured by return on asset and return on equity. Descriptive analysis, correlation matrix and panel regression are used to analyze the data of this study.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Consistent with the legitimacy, stakeholder and signaling theories, the authors found a statistically significant and positive impact of ESG reporting on corporate profitability in Thailand.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The findings highlight the importance of incorporating ESG considerations into companies’ reporting and decision-making processes, as these can enhance firm profitability and performance, attract stakeholders, improve their competitive advantage and step toward sustainability.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"5 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140033842","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Auditor’s response to firm’s environmental violations and engagement in supplemental environmental projects","authors":"Ammad Ahmed, Atia Hussain","doi":"10.1108/jfra-12-2023-0739","DOIUrl":"https://doi.org/10.1108/jfra-12-2023-0739","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>In this study, the authors investigate a pressing concern: how auditors react to their clients facing repercussions due to environmental violations. More specifically, this study aims to examine how environmental engagements, which carry potential risks and liabilities, influence auditors’ decision-making and fee structure.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This study uses unique, reliable and actual violation data from the United States Environmental Protection Agency (US-EPA) from 2000 to 2015, focusing on clients involved in environmental violations that led to legal prosecution and penalties and those who subsequently engaged in voluntary supplemental environmental projects (SEPs). The authors use the ordinary least squares method to test the authors’ main research question and later use propensity score matching and alternate data source (ASSET4) to check the robustness of the authors’ results.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The authors find that firms with environmental violations are more susceptible to auditor resignation. Moreover, the environmental violator firms that maintain their engagement with auditors pay significantly higher audit fees compared to non-environmental violator firms. Furthermore, these environmental violator firms also face extended audit report delays and take longer to appoint a new auditor.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study provides an additional consequence of environmental violations, namely, increased chances of auditor resignation and higher audit fees, alongside the penalties imposed by the US-EPA. Moreover, the authors’ findings position environmental violations and participation in SEPs as important factors in auditors’ business risk assessment.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"32 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139977527","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Earnings predictability or truthfulness? Which one investors care more about","authors":"Shihui Fan, Yan Zhou","doi":"10.1108/jfra-11-2023-0642","DOIUrl":"https://doi.org/10.1108/jfra-11-2023-0642","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to investigate the impact of earnings predictability and truthfulness on nonprofessional investors’ investment willingness.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Earnings predictability is captured by quarterly earnings autocorrelation, and earnings truthfulness is indicated by real earnings management (REM). The average of investment attractiveness and willingness measures investment willingness. The authors use experiments to isolate the impact of quarterly earnings autocorrelation and REM on investors’ investment behaviors.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>From the 2 × 2 design, the authors observe that investors weight more on earnings predictability than earnings truthfulness.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>The generalization of the findings may be constrained for the following reasons. First, the authors use only one proxy, REM, to measure earnings truthfulness. In addition, the authors provide the participants, Amazon Mechanical Turk, with earnings predictability. Results may no longer hold if each participant has different understanding and analysis of earnings predictability.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>In periods of unprecedented and severe financial uncertainty (i.e. the COVID-19 pandemic), investors rely more on earnings predictability than on earnings truthfulness. The study assists managers to strategically emphasize the predictability of earnings to attract investors, especially when firms face financial challenges or uncertainty.</p><!--/ Abstract__block -->\u0000<h3>Social implications</h3>\u0000<p>This study contributes to understanding investor behavior and the critical role of earnings predictability and truthfulness in shaping investment decisions.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This paper contributes to the literature of earnings properties in financial reporting, particularly by shedding light on the nuanced interplay between earnings predictability and earnings truthfulness. The research also demonstrates that elevated earnings autocorrelation indirectly stimulates investment willingness by enhancing the investors’ perception of earnings persistence of targeted firms.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"42 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139926738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Predicting and assessing bankruptcy risk: the role of accounting conservatism and business strategies","authors":"Anas Ghazalat, Said AlHallaq","doi":"10.1108/jfra-07-2023-0388","DOIUrl":"https://doi.org/10.1108/jfra-07-2023-0388","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to investigate the effect of accounting conservatism and business strategies as mitigating tools for bankruptcy risk. It determines the association among these factors and provides insights into the effectiveness of accounting discretion and business strategies in decision-making.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The study uses a sample of 83 nonfinancial listed firms in ASE for the period from 2013 to 2019. Bankruptcy risk is measured using the Altman Z-score (1968). Accounting conservatism is measured using the accrual-based approach, and optimal business strategies are identified through cluster analysis.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results indicate that accounting conservatism has a significant negative effect on bankruptcy risk. Increased application of accounting conservatism practices leads to a decrease in the level of bankruptcy risk. However, the type of business strategy adopted by firms does not have a significant impact on bankruptcy risk, suggesting that firms are not effectively implementing their strategies to mitigate this risk.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>This study focuses on nonfinancial listed firms in the ASE, limiting the generalizability of the findings to other contexts. The study's findings contribute to the understanding of the role of accounting conservatism in reducing bankruptcy risk but highlight the need for further research on the effectiveness of business strategies in mitigating this risk.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study lies in understanding of the role of accounting discretion in financial evaluations and emphasizes the importance of accounting conservatism as a tool for mitigating bankruptcy risk. The study's insights provide valuable guidance to practitioners, regulators and researchers in this field.</p><!--/ Abstract__block -->","PeriodicalId":15826,"journal":{"name":"Journal of Financial Reporting and Accounting","volume":"51 1","pages":""},"PeriodicalIF":2.5,"publicationDate":"2024-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139771663","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}