Journal of Applied Accounting Research最新文献

{"title":"Economic policy uncertainty and cost rigidity: the moderating effects of government contracts and political connections","authors":"Hoyoung Kim, Maretno Agus Harjoto","doi":"10.1108/jaar-07-2023-0224","DOIUrl":"https://doi.org/10.1108/jaar-07-2023-0224","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study examines the relationship between economic policy uncertainty (EPU) and managers' <em>ex ante</em> strategic choice on firms’ fixed and variable costs structure, i.e. cost rigidity and the moderating effect of government contracts and political connections.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Using a sample of 4,162 US firms during 2003–2019 and EPU measure from Baker <em>et al.</em> (2016), the authors examine the association between EPU and cost rigidity using multivariate regression analysis. The authors also examine the moderating effects of government customers and political connections using the subsampling method.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>This study finds that increases in EPU leads to higher cost rigidity, suggesting that managers tend to look ahead and make an <em>ex ante</em> commitment to invest more in fixed costs to avoid congestion costs in anticipation of future product demand during EPU. The study also finds that the presence of government customers and political connections moderates the need for adopting greater cost rigidity.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>This study measures firms' cost rigidity based on archival data. Future studies could utilize managers' cost structure choices using firms' internal management cost structure forecasts data to measure cost rigidity to examine the relationship between cost rigidity and EPU.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study demonstrates that managers tend to make a proactive commitment to invest in fixed inputs when facing demand uncertainty from EPU to avoid congestion costs. This study also highlights the value of having government contracts and political connections by demonstrating that managers are less concerned about the congestion costs, hence weakening the impact of EPU on cost rigidity when they have government as major customers and/or political connections.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This study extends the management accounting literature by documenting that cost rigidity is related to EPU and that the relationship between cost rigidity and EPU also depends on whether the firm has government as major customers and/or political connections or not.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"68 1","pages":""},"PeriodicalIF":3.0,"publicationDate":"2023-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138561311","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 directors' attributes on IFRS fair value disclosure: an institutional perspective","authors":"Imam Arafat, Suzanne G. M. Fifield, Theresa Dunne","doi":"10.1108/jaar-02-2023-0038","DOIUrl":"https://doi.org/10.1108/jaar-02-2023-0038","url":null,"abstract":"PurposeThe current study investigates the impact of directors' attributes on the extent of compliance with International Financial Reporting Standards (IFRS) fair value disclosure requirements. The attributes investigated include directors' human capital (accounting qualification) and social capital (political association), directors' share ownership and the power distance between the chief executive officer (CEO) and the rest of the board members.Design/methodology/approachThe study uses disclosure analysis to measure the extent of compliance with the fair value disclosure requirements of IFRS. Ordinary least squares (OLS) regression is used to test the relationship between the disclosure score and directors' attributes. Data were collected from the annual reports and websites of the sample companies.FindingsContrary to conventional belief, this study's findings suggest that directors' social capital and the power distance between the CEO and the rest of the board act as more powerful factors than directors' human capital in explaining corporate mandatory disclosure. Specifically, the results indicate that powerful actors form a dominant coalition and co-opt influential constituents from the institutional domain to neutralize the effect of legal coercion and the accounting expertise of board members and Big Four audit firms on the extent of compliance with institutional (fair value) rules.Research limitations/implicationsThis study utilizes Oliver's (1991) framework of strategic response to institutional processes in the Bangladeshi context. Although the study provides new insights into corporate disclosure practices, findings are not generalizable due to different institutional settings in different countries. Therefore, future studies could replicate the approach in different institutional settings.Practical implicationsThe findings of this study will be of interest to the International Accounting Standards Board (IASB) as it focuses on a developing country that has adopted IFRS 13 and other fair value-related standards relatively recently.Originality/valueThe disclosure analysis contained in this study represents the first comprehensive analysis of the extent of compliance with the fair value disclosure requirements of IFRS. Furthermore, this study considers the impact of directors' social capital and finds that it is a more powerful determinant of the extent of compliance with IFRS as compared to human capital.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"2 3","pages":""},"PeriodicalIF":3.0,"publicationDate":"2023-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138591802","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 the IFRS adoption reform on audit market concentration, auditor choice and audit quality","authors":"Michael Eric Bradbury, Oksana Kim","doi":"10.1108/jaar-12-2022-0323","DOIUrl":"https://doi.org/10.1108/jaar-12-2022-0323","url":null,"abstract":"&lt;h3&gt;Purpose&lt;/h3&gt;\u0000&lt;p&gt;The study examines the changes in audit market concentration, auditor choice and audit quality in Russia following International Financial Reporting Standards (IFRS) adoption. Scholars have called for further examination of the effects of IFRS adoption on auditors, with an emphasis on the importance of analyzing emerging markets that are characterized by enforcement challenges and lack of proper infrastructure. It focuses on a unique feature of Russian companies – dual audits under Russian Accounting Standards (RAS) and IFRS – and investigates changes in audit concentration and audit quality for the two audit markets.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Design/methodology/approach&lt;/h3&gt;\u0000&lt;p&gt;The authors rely on the audited financial statements of Russian public companies and perform pre-/post-IFRS adoption estimation using a logit regression to ascertain whether public firms change auditors from local firms with limited IFRS expertise to those with global reputation, namely Big 4 audit firms. Further, they examine whether the change in audit market concentration post-2012 affects audit quality as proxied by companies' propensity to receive a modified audit opinion and discretionary accruals. Auditor attributes were hand-collected from audited financial statements and matched with financial variables from Datastream.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Findings&lt;/h3&gt;\u0000&lt;p&gt;The IFRS audit market was dominated by the Big 4 audit firms prior to 2012, and there is strong evidence that audit market share (concentration) increases for IFRS reports but not for RAS reports. In addition, companies are more likely to choose a Big 4 audit firm for an RAS audit, conditional upon a Big 4 firm conducting the IFRS audit. The authors do not find evidence of decrease in the probability of audit firms issuing a modified audit opinion under either RAS or IFRS, indicating that, in the Russian setting, increased auditor concentration post-IFRS adoption does not lead to enhanced risk or decline in audit quality. Moreover, they find that discretionary accruals decline post-2012. Overall, the findings indicate that the concern of global regulators regarding audit market concentration is not justified.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Research limitations/implications&lt;/h3&gt;\u0000&lt;p&gt;The Russian reporting environment is unique and generally characterized by significant agency problems, and the study’s estimation sample is not large, compared to prior studies conducted predominantly in Western jurisdictions. Nevertheless, the authors shed light on the audit concentration phenomenon within emerging markets, for which empirical evidence is scarce. Future research could explore the impact of other capital market events and exogenous shocks, not limited to IFRS adoption, on the characteristics of Russia's audit market.&lt;/p&gt;&lt;!--/ Abstract__block --&gt;\u0000&lt;h3&gt;Practical implications&lt;/h3&gt;\u0000&lt;p&gt;The IFRS reporting regime is commonly associated with enhanced reporting quality and improved inf","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"123 1","pages":""},"PeriodicalIF":3.0,"publicationDate":"2023-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138519330","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":"Public firm presence, growth opportunity and investment in fixed intangible assets of private UK firms","authors":"A. Danso, E. Adu‐Ameyaw, A. Boateng, Bolaji Iyiola","doi":"10.1108/jaar-01-2023-0032","DOIUrl":"https://doi.org/10.1108/jaar-01-2023-0032","url":null,"abstract":"PurposePrior studies suggest that, in an industry in which several public firms operate (i.e. greater public firm presence), uncertainty about business operations within the industry is reduced due to greater analyst coverage and quality of information disclosure. In this study, the authors examine how UK private firms respond to investment opportunities in fixed intangible assets (FIAs) in an environment characterised by greater public firm presence (PFP).Design/methodology/approachUsing data from 61,278 (1,358) private (public) UK firms operating in ten sectors spanning from 2006 to 2016, the authors conduct this analysis by using panel econometric techniques.FindingsThe authors observe that private firms are more responsive to their FIA investment opportunities when they operate in industries with more PFP. Also, the authors find that firms in industries with better information quality use more debt and have longer debt maturity security but less internal cash flow. Overall, the findings indicate that PFP generates positive externalities for private firms by lessening industry uncertainty and enhancing more efficient FIA investment. The results are robust to endogeneity concerns.Research limitations/implicationsA key limitation of the study is that it focuses on a single country (the UK) and therefore there is a likelihood that the results found are specific to this setting but not others, particularly developing and emerging economies. Thus, future studies could explore these ideas from the viewpoint of multiple countries.Practical implicationsOverall, the study demonstrates the importance of information disclosure in driving investment decisions of firms.Originality/valueWhile this paper builds on the information disclosure and corporate investment literature, it is one of the first attempts, to the best of the authors’ knowledge, to explore how private UK firms respond to investment in FIAs in an environment characterised by greater PFP.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"149 4","pages":""},"PeriodicalIF":3.0,"publicationDate":"2023-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139259058","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":"Financial distress prediction in private firms: developing a model for troubled debt restructuring","authors":"Asad Mehmood, Francesco De Luca","doi":"10.1108/jaar-12-2022-0325","DOIUrl":"https://doi.org/10.1108/jaar-12-2022-0325","url":null,"abstract":"<h3>Purpose</h3>\u0000<p> This study aims to develop a model based on the financial variables for better accuracy of financial distress prediction on the sample of private French, Spanish and Italian firms. Thus, firms in financial difficulties could timely request for troubled debt restructuring (TDR) to continue business.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p> This study used a sample of 312 distressed and 312 non-distressed firms. It includes 60 French, 21 Spanish and 231 Italian firms in both distressed and non-distressed groups. The data are extracted from the ORBIS database. First, the authors develop a new model by replacing a ratio in the original Z”-Score model specifically for financial distress prediction and estimate its coefficients based on linear discriminant analysis (LDA). Second, using the modified Z”-Score model, the authors develop a firm TDR probability index for distressed and non-distressed firms based on the logistic regression model.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p> The new model (modified Z”-Score), specifically for financial distress prediction, represents higher prediction accuracy. Moreover, the firm TDR probability index accurately depicts the probabilities trend for both groups of distressed and non-distressed firms.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p> The findings of this study are conclusive. However, the sample size is small. Therefore, further studies could extend the application of the prediction model developed in this study to all the EU countries.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p> This study has important practical implications. This study responds to the EU directive call by developing the financial distress prediction model to allow debtors to do timely debt restructuring and thus continue their businesses. Therefore, this study could be useful for practitioners and firm stakeholders, such as banks and other creditors, and investors.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p> This study significantly contributes to the literature in several ways. First, this study develops a model for predicting financial distress based on the argument that corporate bankruptcy and financial distress are distinct events. However, the original Z”-Score model is intended for failure prediction. Moreover, the recent literature suggests modifying and extending the prediction models. Second, the new model is tested using a sample of firms from three countries that share similarities in their TDR laws.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"71 3","pages":""},"PeriodicalIF":3.0,"publicationDate":"2023-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138519329","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":"Tying the knot – linking bootstrapping and working capital management in established enterprises","authors":"Margaret Fitzsimons, Teresa Hogan, Michael Thomas Hayden","doi":"10.1108/jaar-03-2023-0078","DOIUrl":"https://doi.org/10.1108/jaar-03-2023-0078","url":null,"abstract":"Purpose Bootstrapping is a practitioner-based term adopted in entrepreneurship to describe the techniques employed in micro, small and medium-sized enterprises (MSMEs) to minimise the need for external funding by securing resources at little or no cost and applying strategies to effectively use resources. Working capital management (WCM) is a term used in financial management to define a set of practices used to manage business resources, including cash management. This paper explores the overlap and divergence between these two disciplinary distinct concepts. Design/methodology/approach A dual methodology is employed. First, the usage of the two terms in prior literature is analysed and synthesised. Second, the study uses factor analysis to explore how bootstrapping practices described by owners of 167 established MSMEs relate to the components of WCM in financial management. Findings The factor analysis identifies two main bootstrapping practices employed by MSMEs: (1) delaying payments and owner-related bootstrapping and (2) customer-related bootstrapping. Delaying payments is an integral practice in trade payables management and customer-related bootstrapping includes practices that are integral to trade receivables management. Therefore, links between bootstrapping practices and WCM practices are firmly established. Research limitations/implications The study is not without limitations. Based on cross-sectional evidence for established firms in Ireland only, future studies could explore cross-country longitudinal panel data to fully examine life cycle and sectoral effects, as well as other external shocks (for example, COVID-19) on bootstrapping and WCM practices. This study does not explain why some factors (for example, joint utilisation and inventory management) are present in some bootstrapping studies and not in others; further case study research might help explain this. Finally, changes in the business environment facing start-ups and established enterprise, including increased digitalisation, online trading, self-employment, remote hub working and sustainability, offer new avenues for bootstrapping research. Originality/value This is the first study to comprehensively explore the conceptual and empirical links between bootstrapping and WCM. This study will enable researchers and practitioners in these two distinct disciplines to learn from each other. Accounting researchers and practitioners can broaden their understanding of how WCM “works” in MSME settings. Similarly, entrepreneurship researchers and practitioners can deepen their understanding of how bootstrapping can be adopted by businesses to manage resources effectively.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"15 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135876274","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":"Political alignment and corporate fraud: evidence from the United States of America","authors":"Adriana Cordis","doi":"10.1108/jaar-06-2022-0159","DOIUrl":"https://doi.org/10.1108/jaar-06-2022-0159","url":null,"abstract":"Purpose The paper investigates whether political geography, as measured by the degree of alignment of state politicians with the party of the USA President, has an impact on corporate fraud convictions. Design/methodology/approach Prior research shows that the degree of alignment between state politicians and the president's political party is positively correlated with measures of earnings management for firms headquartered in the state. Political alignment is conducive to earnings management because it affects a firm's information and enforcement environment by increasing policy risk and promoting lenient regulatory oversight. The paper posits that this environment is also conducive to corporate fraud and tests this hypothesis using pooled ordinary least squares (OLS) and panel regressions with annual state-level data for 2003–2018. Findings The paper documents a positive and statistically significant relationship between political alignment and corporate fraud conviction rates by state. Research limitations/implications The conclusions are tempered by data limitations. First, the conviction data are available at the state level only. Second, the true level of fraud is inherently unobservable and the conviction data may not reflect the actual number of frauds that are committed. Practical implications Fraud examiners might benefit from considering the role of political connectedness in determining fraud risk. Although additional research is needed before making concrete recommendations, the initial indications clearly point to political connections as a potential concern. Originality/value The findings build on evidence that political connections influence earnings management. Rather than focusing on direct measures of connectedness, such as lobbying expenditures, the paper examines a plausibly exogenous measure: political geography.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"78 9","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135808739","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 role of firm-level CSR governance characteristics as a driver of comprehensive CSR reporting – the moderating role of profitability","authors":"Waris Ali, Jeffrey Wilson, Amr Elalfy, Hina Ismail","doi":"10.1108/jaar-12-2022-0343","DOIUrl":"https://doi.org/10.1108/jaar-12-2022-0343","url":null,"abstract":"PurposeThis study aims to examine the impact of firm-level corporate social responsibility (CSR) governance characteristics on the extent, quality and comprehensiveness of CSR reporting of Pakistani listed enterprises.Design/methodology/approachThis study used content analysis of corporate annual reports and stand-alone CSR reports available on corporate websites in 2021 to identify CSR-related governance features and to calculate CSR reporting scores. Multivariate regression is used to test relationships. In addition, the analysis tested the moderating role of profitability in these relationships.FindingsFirm-level CSR governance characteristics contribute to the extent, quality and comprehensiveness of CSR reporting in a developing country. Further, results confirm that profitability moderates the relationship between CSR governance and the extent and comprehensiveness of CSR reporting.Research limitations/implicationsThis study employed cross-sectional data and focused on a single developing country. Future studies might include a cross-national sample and longitudinal data to demonstrate the broader relevance of these findings. The outcomes of this study are restricted to CSR disclosures based on CSR reports and annual reports. Future research may examine additional corporate communication channels, such as websites and social media platforms.Practical implicationsThis research validates the important role of CSR governance mechanisms as a driver of comprehensive CSR reporting. Business leaders and policymakers can facilitate improved corporate reporting by requiring companies to implement CSR-related governance mechanisms.Originality/valueThis is the first study to test the influence of firm-level CSR governance mechanisms in promoting the quantity, quality and comprehensiveness of CSR reporting in a developing country.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"78 8","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135808740","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 interplay of sustainability reporting and management control – an exploration of ways for dovetailing to develop reporting beyond accountability","authors":"Albert Anton Traxler, Daniela Schrack, Dorothea Greiling, Julia Feldbauer, Michaela Lautner","doi":"10.1108/jaar-08-2022-0222","DOIUrl":"https://doi.org/10.1108/jaar-08-2022-0222","url":null,"abstract":"Purpose Companies must no longer just report on corporate sustainability (CS) performance but also demonstrate that they are aligning their strategies with sustainability. However, suitable management control systems (MCS) are required to implement a sustainability strategy. Thereby, sustainability reporting (SR) can also be employed for control purposes. On the other hand, existing MCS can be used to develop SR that goes beyond accountability. Accordingly, this paper explores how this interplay can be designed. Design/methodology/approach For the study, 20 semi-structured interviews were conducted with persons from ATX and DAX companies. Since the interplay should be examined from a holistic control perspective, the authors used the MCS package of Malmi and Brown as an analysis framework. Findings Nowadays, merely focusing on reporting is too narrow a view. It is therefore not surprising that the investigation was able to reveal various possible linkages between MCS and SR that span the full range of the MCS package of Malmi and Brown. Research limitations/implications Future research should also consider non-listed companies to investigate potential differences and take a closer look at the proposed reciprocal nature of the interplay. Practical implications The findings expand the knowledge of how companies can use SR for control purposes and how existing MCS can help develop a reporting that goes beyond accountability. Originality/value The study contributes by highlighting the potential of SR to control CS performance from a holistic MCS perspective and likewise the impact of existing MCS on reporting. In addition, different theoretical perspectives are used to explain why the interplay can be designed differently in practice.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136104941","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":"Do retail and institutional investors react differently to earnings management? Evidence from Indian IPOs","authors":"V.P. Priyesh, Lukose P.J. Jijo","doi":"10.1108/jaar-10-2022-0281","DOIUrl":"https://doi.org/10.1108/jaar-10-2022-0281","url":null,"abstract":"Purpose This study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects IPO valuation, a topic that is underexplored in accounting research. Design/methodology/approach The study uses the data of 310 IPOs from India during the period 2000–2021. The association between pre-IPO earnings management with investor demand and valuation is tested using cross-sectional ordinary least squares regression models with heteroscedasticity-robust standard errors. Findings The study finds that the degree of pre-IPO earnings management impacts retail investor demand, measured as their over-subscription multiple. Pre-IPO earnings management is unrelated to institutional investor bidding. Further, this paper suggests no relation between pre-IPO earnings management and IPO valuation. Research limitations/implications Future studies could explore various other forms of earnings management and their impact on investor demand and valuation. Practical implications The findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is related to IPO demand and valuation. Originality/value This study contributes to the existing literature on IPO-earnings management and investor demand by documenting that issuer firms engage in earnings management to influence investor demand, particularly retail investor demand. Analysis of IPO valuation reveals that earnings management is mostly unrelated to IPO valuation, contrary to the general perception in the literature.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":"50 8","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135273095","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}