Journal of Accounting Literature最新文献

{"title":"Carbon emission trading scheme and earnings smoothness","authors":"June Cao, Zijie Huang, Arief B. Kristanto, Millie Liew","doi":"10.1108/jal-05-2024-0088","DOIUrl":"https://doi.org/10.1108/jal-05-2024-0088","url":null,"abstract":"PurposeThe objective of this study is to investigate how the implementation of an Emission Trading Scheme (ETS) influences an ETS-regulated firm’s level of earnings smoothness.Design/methodology/approachUsing a staggered difference-in-differences model based on China’s ETS pilots commencing in 2013, this study investigates how the implementation of ETS pilots affects regulated firms’ earnings smoothing relative to non-regulated firms. The sample period spans from 2008 to 2019. This model incorporates time-invariant firm-specific heterogeneity, time-specific heterogeneity, and a series of firm characteristics to establish causality. Robustness tests justify findings.FindingsThe results show that after implementing an ETS pilot, regulated firms increase their earnings smoothness relative to non-regulated firms. Regulated firms strategically smooth their earnings to obtain additional financial resources and meet compliance costs arising from an ETS. Further analysis reveals that regulated firms’ earnings smoothing activity is a function of environmental regulations, managerial integrity, and capital market incentives.Originality/valueThis study deviates from past research focusing on the environmental consequences of ETS by indicating that an ETS affects regulated firms’ financial reporting decisions. Specifically, regulated firms resort to earnings smoothing as a short-term exit strategy from financing concerns arising from environmental regulations. This finding expands prior literature primarily focusing on the effect of tax and financial reporting regulations on earnings smoothness. This study also indicates that firms utilize earning smoothing to lower their short-term cost of capital, which enables them to access additional financing at a lower cost and reconfigure their operations to meet stakeholder environmental demands.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141919151","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":"Carbon emission trading scheme and earnings smoothness","authors":"June Cao, Zijie Huang, Arief B. Kristanto, Millie Liew","doi":"10.1108/jal-05-2024-0088","DOIUrl":"https://doi.org/10.1108/jal-05-2024-0088","url":null,"abstract":"PurposeThe objective of this study is to investigate how the implementation of an Emission Trading Scheme (ETS) influences an ETS-regulated firm’s level of earnings smoothness.Design/methodology/approachUsing a staggered difference-in-differences model based on China’s ETS pilots commencing in 2013, this study investigates how the implementation of ETS pilots affects regulated firms’ earnings smoothing relative to non-regulated firms. The sample period spans from 2008 to 2019. This model incorporates time-invariant firm-specific heterogeneity, time-specific heterogeneity, and a series of firm characteristics to establish causality. Robustness tests justify findings.FindingsThe results show that after implementing an ETS pilot, regulated firms increase their earnings smoothness relative to non-regulated firms. Regulated firms strategically smooth their earnings to obtain additional financial resources and meet compliance costs arising from an ETS. Further analysis reveals that regulated firms’ earnings smoothing activity is a function of environmental regulations, managerial integrity, and capital market incentives.Originality/valueThis study deviates from past research focusing on the environmental consequences of ETS by indicating that an ETS affects regulated firms’ financial reporting decisions. Specifically, regulated firms resort to earnings smoothing as a short-term exit strategy from financing concerns arising from environmental regulations. This finding expands prior literature primarily focusing on the effect of tax and financial reporting regulations on earnings smoothness. This study also indicates that firms utilize earning smoothing to lower their short-term cost of capital, which enables them to access additional financing at a lower cost and reconfigure their operations to meet stakeholder environmental demands.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141919637","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":"Does mandating gender quota in corporate boards affect firms’ credit ratings? Evidence from India","authors":"Navya J. Muricken, Praveen Bhagawan, Jyoti Prasad Mukhopadhyay","doi":"10.1108/jal-04-2024-0070","DOIUrl":"https://doi.org/10.1108/jal-04-2024-0070","url":null,"abstract":"PurposeThe purpose of this paper is to examine the impact of compulsory presence of female members due to gender quota on corporate boards on firms’ credit ratings.Design/methodology/approachWe investigate the impact of female directorial appointment on a firm’s credit rating using firm-level panel data in a regression framework with industry- and year-fixed effects to account for unobserved heterogeneity. Further, to address endogeneity, we employ the difference-in-differences (DiD) technique by exploiting the changes in the corporate board composition induced by the exogeneous gender quota regulation. We also employ the Oster (2019) approach to test for omitted variable bias.FindingsIn this paper, we find that the firms that appoint female members on corporate boards post-gender quota mandate (treatment firms) enjoy improved credit ratings as compared to firms that had female members on corporate boards before the gender quota mandate (control group firms) became effective. The findings are robust to alternate definitions of credit rating, treatment and post variables.Originality/valueWe employ an alternative econometric technique, such as Oster’s (2019) specification, to show that the involvement of female directors on corporate boards helps firms in improving firm’s credit ratings. We also identify corporate risk measured using stock return volatility and cash flow volatility as the potential channels through which female directors’ involvement on corporate boards leads to the improvement in firms’ credit ratings.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141919024","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":"Does mandating gender quota in corporate boards affect firms’ credit ratings? Evidence from India","authors":"Navya J. Muricken, Praveen Bhagawan, Jyoti Prasad Mukhopadhyay","doi":"10.1108/jal-04-2024-0070","DOIUrl":"https://doi.org/10.1108/jal-04-2024-0070","url":null,"abstract":"PurposeThe purpose of this paper is to examine the impact of compulsory presence of female members due to gender quota on corporate boards on firms’ credit ratings.Design/methodology/approachWe investigate the impact of female directorial appointment on a firm’s credit rating using firm-level panel data in a regression framework with industry- and year-fixed effects to account for unobserved heterogeneity. Further, to address endogeneity, we employ the difference-in-differences (DiD) technique by exploiting the changes in the corporate board composition induced by the exogeneous gender quota regulation. We also employ the Oster (2019) approach to test for omitted variable bias.FindingsIn this paper, we find that the firms that appoint female members on corporate boards post-gender quota mandate (treatment firms) enjoy improved credit ratings as compared to firms that had female members on corporate boards before the gender quota mandate (control group firms) became effective. The findings are robust to alternate definitions of credit rating, treatment and post variables.Originality/valueWe employ an alternative econometric technique, such as Oster’s (2019) specification, to show that the involvement of female directors on corporate boards helps firms in improving firm’s credit ratings. We also identify corporate risk measured using stock return volatility and cash flow volatility as the potential channels through which female directors’ involvement on corporate boards leads to the improvement in firms’ credit ratings.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141919548","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":"Strategic responses of the clients of multinational audit firms to corporate governance audit regulation","authors":"Z. Abdul-Baki, Ahmed Diab, Abdelrhman Yusuf","doi":"10.1108/jal-03-2024-0051","DOIUrl":"https://doi.org/10.1108/jal-03-2024-0051","url":null,"abstract":"PurposeWe investigate how existing investment in strong external corporate governance mechanism—use of Big 4 audit firms—affect compliance with corporate governance audit (CGA) regulation in Nigeria and Kenya. While both countries are characterized by weak enforcement, they differ in their corporate governance audit regulatory strategies.Design/methodology/approachThe study adopts neo-institutional theory as a theoretical framework and uses logit and probit models and generalized estimating equations as empirical models to test the hypotheses developed.FindingsThe study finds that persuasive coercive isomorphism provides reputational benefits to clients of multinational audit firms in Kenya and encourages them to conduct and report their CGA. In Nigeria, clients of multinational audit firms are less likely to conduct CGA as there is no persuasive coercive isomorphism in place. We also find many internal corporate governance variables to positively influence CGA.Practical implicationsThe success of any regulation is dependent on the level of compliance by regulated entities. As clients of multinational audit firms usually have the motivation and resources to employ such high quality audit firms, it is expected that if they are well motivated, they will commit similar level of resources to conducting CGA. In Nigeria, the Financial Reporting Council should develop some persuasive measures to encourage clients of multinational audit firms to conduct CGA. In both Nigeria and Kenya, enforcement of internal corporate governance frameworks should be strengthened.Originality/valueThis is the first study to explore how regulatory strategies affect strategic responses of regulated entities to CGA regulation, introducing a new dimension to the ESG literature.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141798846","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":"Investor stewardship disclosure and firm R&D investment","authors":"James Routledge","doi":"10.1108/jal-01-2024-0006","DOIUrl":"https://doi.org/10.1108/jal-01-2024-0006","url":null,"abstract":"PurposeThis study explores the association between institutional investors’ stewardship activity, disclosed under Japan’s Stewardship Code, and the R&D investments of their investee companies.Design/methodology/approachRecognizing the pivotal role of R&D investment in long-term value creation, this study uses comprehensive data from institutional investor disclosures to assess the impact of stewardship activity on their investee companies.FindingsThe findings show that investor stewardship activity is a factor that influences strategic R&D investment. Specifically, a positive association is found between code-compliant institutional investor shareholding and R&D investment, contingent on high levels of stewardship activity.Originality/valueBy using stewardship disclosures to measure stewardship activity, this study sheds new light on institutional investors’ role in promoting R&D investment. The findings suggest that stewardship regulation is a valid governance policy mechanism to the extent that it promotes stewardship activity. Moreover, the findings show that stewardship disclosures provide valuable information about the potential value enhancement associated with institutional shareholding.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141805561","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":"ESG performance and analyst recommendations: evidence from sustainability analysts in the Chinese market","authors":"Shiqiang Chen, Mian Cheng, Yonggen Luo, Albert Tsang","doi":"10.1108/jal-04-2024-0063","DOIUrl":"https://doi.org/10.1108/jal-04-2024-0063","url":null,"abstract":"PurposeIn this study, we examine the influence of a firm’s environmental, social, and governance (ESG) performance on analysts’ stock recommendations and earnings forecast accuracy in the Chinese context.Design/methodology/approachWe take a textual analysis approach to analyst research reports issued between 2010 and 2019, and differentiate between two distinct analyst categories: “sustainability analysts,” which refer to those more inclined to incorporate ESG information into their analyses, and “other analysts.”FindingsOur evidence indicates that sustainability analysts tend to be significantly more likely than others to provide positive stock recommendations and demonstrate enhanced accuracy in forecasting earnings for companies with superior ESG performance. Our additional analyses reveal that this finding is particularly prominent for analysts who graduated from institutions emphasizing the protection of the environment, those recognized as star analysts, those affiliated with ESG-oriented brokerages, and forecasts made by analysts in the later part of the sample period. Our findings further indicate that sustainability analysts exhibit a more pronounced negative response when confronted with a negative ESG event.Originality/valueIn general, the evidence from this study reveals the interplay between ESG factors and analyst behavior, offering valuable implications for both financial analysts and sustainable investment strategies.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141810234","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":"Understanding the relation between climate change risks and biodiversity disclosures: an international analysis","authors":"Nurlan S. Orazalin, C. Ntim, John Kalimilo Malagila","doi":"10.1108/jal-04-2024-0072","DOIUrl":"https://doi.org/10.1108/jal-04-2024-0072","url":null,"abstract":"PurposeThis study explores the relation between firm-level climate change risks, measured by carbon emissions and waste generation, and the level of biodiversity disclosures.Design/methodology/approachDrawing on an international sample from 2009 to 2021, our study employs panel regression models to assess the effects of climate change risks on biodiversity disclosures. We also conduct a range of sensitivity analyses, including additional proxies, endogeneity tests, and alternative samples to examine the robustness of our inferences.FindingsWe find that firms with higher carbon emissions and waste generation levels tend to disclose extensive biodiversity information. Furthermore, we provide evidence that the disaggregated components of carbon (Scope 1 and 2) emissions and waste (hazardous and non-hazardous) generation volumes are positively associated with biodiversity disclosures. Our results also reveal that the effects of climate change risks on biodiversity disclosures are stronger for firms from environmentally sensitive industries. Finally, our results show that climate and biodiversity protection regulations appear to be effective in limiting legitimation efforts.Originality/valueConsistent with legitimacy theory, our findings suggest that high carbon and waste emitting firms tend to utilize increased biodiversity disclosures as a legitimizing tool to conform to societal expectations and protect their legitimacy.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141817202","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 industrial robot uses on the labor cost stickiness of Chinese firms","authors":"Xichan Chen, Feng Chen, Xing Liu, Meiru Zhao","doi":"10.1108/jal-07-2023-0127","DOIUrl":"https://doi.org/10.1108/jal-07-2023-0127","url":null,"abstract":"PurposeThe study aims to investigate the impact of industrial robot application on corporate labor cost stickiness and labor investment efficiency in China.Design/methodology/approachUsing the textual analysis to construct firm-level industrial robot application indicators in China, we implement the methodology in Anderson et al. (2003) and Banker and Byzalov (2014) to estimate cost stickiness.FindingsWe argue that the industrial robot uses in China would increase firms’ labor adjustment costs by increasing the employment scale and upgrading the employment structure (i.e. by employing more high-skilled and high-educated labor). Consistent with our expectation through the channel of labor adjustment costs, the use of robotics increases firms’ labor cost stickiness. We further find that the positive impact is more significant among labor-intensive industries, and among state-owned enterprises with lower labor adjustment flexibility. We also find that industrial robot uses do not decrease the labor cost stickiness even when robots are more likely to substitute labor. Finally, we find that industrial robot uses significantly facilitate more efficient hiring practices by mitigating overinvestment in labor (i.e. over-hiring).Originality/valueAgainst the backdrop of intelligent manufacturing worldwide, our study sheds new insight into the effects of new technologies on corporate labor cost behavior in developing countries. We contribute to scant studies examining how robotics, AI adoption or other automation technologies (e.g. specialized machinery, software, etc.) affect corporate cost behavior.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-07-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141664035","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":"Interpersonal population diversity in the bank boardroom and corporate misconduct","authors":"Chrysovalantis Vasilakis, John Thornton","doi":"10.1108/jal-07-2023-0114","DOIUrl":"https://doi.org/10.1108/jal-07-2023-0114","url":null,"abstract":"PurposeThis research empirically establishes that the interpersonal population diversity of executive board members partly explains the differences in financial misconduct across US banks. It advances the hypothesis that heterogeneity in the composition of an interpersonal population and diverse traits of board members, originating from the prehistoric course of the exodus of Homo sapiens from East Africa tens of thousands of years ago, is an important factor explaining the effectiveness of executive board monitoring with respect to a bank engaging in financial misconduct. The underlying intuition is that population-fragmented societies, characterized by mistrust, preference heterogeneity and corruption, find it difficult to sustain collective integrity action.Design/methodology/approachEmploying a panel of US banks from 1998 to 2019 we find that adding directors from countries with different levels of interpersonal population diversity is positively associated with financial misconduct as measured by enforcement and class action litigation against banks by the main regulatory agencies. Furthermore, we document that the more population-diverse bank boards are more likely to commit misconduct, consistent with a mechanism of inter-generational transmission of cultural norms of mistrust and non-cooperation.FindingsWe find that adding directors from countries with different levels of interpersonal population diversity is positively associated with financial misconduct as measured by enforcement and class action litigation against banks by the main regulatory agencies. These results are robust to controlling for bank-specific variables, including other board characteristics, and to the use of instrumental variables.Practical implicationsThe findings suggest that reducing financial misconduct by banks likely requires reducing the interpersonal population diversity of banks’ executive boards.Originality/valueWe show how bank boards with different interpersonal population diversity impact the likelihood of engaging in misconduct provides evidence of the microeconomic effects of interpersonal population diversity. We show the negative results of diversity that they can have on the management of a firm given that populated diverse boards are more likely to lead to higher levels of misconduct. Our evidence reveals that banks having interpersonal population fragmented boards are more likely to commit misconduct given the cultural norms of mistrust and the lack of societal cohesiveness.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":1.1,"publicationDate":"2024-07-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141664897","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}