{"title":"The effects of local newspaper closures on nonprofits’ executive compensation","authors":"Robert Felix , Joshua A. Khavis , Mikhail Pevzner","doi":"10.1016/j.jaccpubpol.2023.107168","DOIUrl":"https://doi.org/10.1016/j.jaccpubpol.2023.107168","url":null,"abstract":"<div><p>We examine the role of local newspapers in monitoring the nonprofit sector by testing how local newspaper closures affect nonprofits’ executive compensation levels. Although prior research establishes that local newspaper closures affect behavior of for-profits and municipalities, the unique governance and enforcement environment of nonprofits make it unclear whether and how closures of local newspapers will affect nonprofits’ executive compensation spending behavior. Consistent with local newspapers serving as an alternative monitoring mechanism within the nonprofit sector, we find that, following local newspaper closures, the levels of nonprofits’ executive compensation spending increases. This effect is less pronounced among nonprofits having audits and among those with better internal governance. Our results suggest that newspaper closures exacerbate agency problems among nonprofits particularly when alternative monitoring mechanisms of nonprofits are weaker.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"43 ","pages":"Article 107168"},"PeriodicalIF":3.6,"publicationDate":"2023-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138475341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Who participates in corporate income tax consolidation?: Evidence from Japan","authors":"Kazuki Onji","doi":"10.1016/j.jaccpubpol.2023.107158","DOIUrl":"https://doi.org/10.1016/j.jaccpubpol.2023.107158","url":null,"abstract":"<div><p>When a group of affiliated corporations can file a single tax return based on a combined income, what types of groups would take up the option? This study empirically analyzes decisions to participate in a single-jurisdiction consolidated tax filing. The data consists of 2,782 Japanese corporate groups headed by publicly-traded corporations observed from 2002 to 2007. Results indicate a higher likelihood of participation among groups characterized by low correlation in returns among group members, high variance in returns, many subsidiaries, and losses accumulated in parents. The significant influence of variance and covariance of returns suggests that a consolidation scheme improves the efficiency of a corporate income tax by reducing profit shifting.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"43 ","pages":"Article 107158"},"PeriodicalIF":3.6,"publicationDate":"2023-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138395173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"To replicate or not to replicate? That is the question","authors":"Divesh S. Sharma","doi":"10.1016/j.jaccpubpol.2023.107151","DOIUrl":"10.1016/j.jaccpubpol.2023.107151","url":null,"abstract":"<div><p><span>The scientific research world was shaken by revelations of a crisis in reproducing well-regarded research in psychology. This crisis reverberated across several academic disciplines including accounting, which led to controversy about the place and status of replications in accounting. The imperative for encouraging replications in our field is not new and has been met largely with opposition. While antagonists and advocates hold their ground, I believe it is critical to address misconceptions of the role and value of replication studies. In this essay, I clarify the role of replications focusing on two general types of replication: close and differentiated replications. I then discuss the status of replication in accounting followed by a brief </span>narrative on a well-known replication in the auditor independence literature. My concluding comments weave through suggested pathways for a better understanding of replication studies.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107151"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135663612","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Misstatement verifiability and managers’ earnings warning decisions","authors":"Jihun Bae , Jaeyoon Yu","doi":"10.1016/j.jaccpubpol.2023.107152","DOIUrl":"10.1016/j.jaccpubpol.2023.107152","url":null,"abstract":"<div><p>We examine whether the verifiability of misstatements in prior forward-looking earnings disclosures contributes to managers’ decisions to issue earnings warnings. Using securities class action lawsuits from 1996 to 2019 pertaining to forward-looking earnings disclosures, we find that earnings warnings are positively associated with the verifiability of misstatements in such disclosures. The results survive entropy balancing and firm-fixed effects to mitigate endogeneity concerns. The positive relation between earnings warnings and misstatement verifiability is more pronounced for firms 1) with a general counsel in the top management team and 2) that face higher ex-ante litigation risk, and less pronounced for firms whose managers engaged in insider selling during the class action lawsuit period. We also show that earnings warnings help to increase the likelihood of a lawsuit dismissal (i.e., lowering litigation costs) when the lawsuit involves misstatements that are more (rather than less) verifiable. Taken together, our findings suggest that managers issue earnings warnings when it helps to reduce litigation costs, consistent with the notion that managers can achieve a greater reduction in litigation costs by issuing earnings warnings.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107152"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0278425423001126/pdfft?md5=f1b8d4f3d10f1b50755a0c51f216bffd&pid=1-s2.0-S0278425423001126-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135707297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Tone management and stock price crash risk","authors":"Doron Reichmann","doi":"10.1016/j.jaccpubpol.2023.107155","DOIUrl":"10.1016/j.jaccpubpol.2023.107155","url":null,"abstract":"<div><p>Managers have substantial discretion over qualitative disclosures. At the same time, disclosure tone is an important source of information to investors. In this study, I examine the relation between tone management and future stock price crash risk. Consistent with the view that managers use their discretion over disclosure tone for intentional information management, I find that tone management in the Management Discussion and Analysis of 10-K files is, on average, positively associated with future stock price crash risk, even after controlling for quantitative crash determinants and financial disclosure readability. Cross-sectional analyses reveal that the effect is more pronounced when managers have more incentives and are less constrained in manipulating disclosure tone. Collectively, my results suggest that tone management can have greater and broader capital market consequences than previously documented.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107155"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136054548","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Firms’ discretion in the option exercise price adjustments during spinoffs","authors":"Tao Sun","doi":"10.1016/j.jaccpubpol.2023.107135","DOIUrl":"10.1016/j.jaccpubpol.2023.107135","url":null,"abstract":"<div><p>During corporate spinoffs, executives’ original options are converted to new options whose exercise price is reduced. The tax<span> and financial regulations however do not provide specific guidance regarding the option conversion, giving firms considerable discretion over the extent of reduction in the exercise price. This paper finds evidence that firms indeed use discretion to reduce the new option’s exercise price to favor executives during corporate spinoffs. This paper examines two alternative explanations why firms make such discretionary adjustments. The results support that firms with weak corporate governance are more likely to use discretion to reduce exercise prices. The study also finds some evidence suggesting that boards might consider whether the spinoffs benefit shareholders when they make the discretionary reductions in exercise prices.</span></p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107135"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42377737","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Due process as a legitimating mechanism: Participation and responsiveness in the development of IFRS 17: Insurance contracts","authors":"Miguel Arce, Begoña Giner, Mohammed Amin Taleb","doi":"10.1016/j.jaccpubpol.2023.107150","DOIUrl":"10.1016/j.jaccpubpol.2023.107150","url":null,"abstract":"<div><p>This paper investigates the role of due process in legitimizing the International Accounting Standards Board (IASB) and uses the development of IFRS 17-Insurance Contracts (IASB, 2017a) as a case study. It examines stakeholders’ participation and assesses the IASB’s responsiveness to the views expressed in the comment letters. It focuses on changes in recognition, valuation, and disclosure during the 10-year process, in which the Financial Accounting Standards Board (FASB) played a relevant role. For input and through-put legitimacy analysis, we conduct content analysis of comment letters and consult additional sources to understand key concerns in insurance accounting. The IASB received substantial feedback from diverse stakeholders and geographical regions, primarily preparers and European constituents. Our findings indicate that decisions throughout the standard-setting process align with stakeholders’ interests, without preferential treatment for any groups, affirming the institution’s legitimacy was preserved. This confirms that the IASB’s due process can be seen as a shield against political and constituent pressures. Nevertheless, this study cannot definitively attribute identified changes solely to comment letters, as other channels may have been equally influential.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107150"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0278425423001102/pdfft?md5=437fbd8d70c1824496e7b07c13124fb4&pid=1-s2.0-S0278425423001102-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135761238","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
James D. Brushwood , Michelle A. Draeger , Eric T. Rapley
{"title":"Cannabis financial statement audits in Canada before and after legalization: A “joint” analysis","authors":"James D. Brushwood , Michelle A. Draeger , Eric T. Rapley","doi":"10.1016/j.jaccpubpol.2023.107153","DOIUrl":"10.1016/j.jaccpubpol.2023.107153","url":null,"abstract":"<div><p>Cannabis has become a multi-billion-dollar worldwide industry and presents accountants with unique challenges and opportunities. This descriptive study examines characteristics of financial statement audits for this budding industry in Canada, one of the first countries to legalize recreational adult use of cannabis. Consistent with cannabis audit clients having higher risk, we find they incur more audit fees before and after legalization than a matched sample of non-cannabis companies. Cannabis companies also pay more non-audit fees before and after legalization, consistent with additional business opportunities for their auditors. The size of cannabis companies grew substantially after Canada’s 2018 legalization, corresponding with increased occurrences of Big 4 cannabis company audits. However, compared to a matched sample of non-cannabis companies and controlling for size, cannabis companies are less (more) likely to be audited by a Big 4 (second-tier) firm. This observation is likely attributed to the reputation risk from being associated with a cannabis client, which is potentially higher for Big 4 firms than second-tier firms.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107153"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135762268","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Amanda M. Convery , Matt Kaufman , Terry D. Warfield
{"title":"Stakeholder conflict and standard-setting foundation oversight","authors":"Amanda M. Convery , Matt Kaufman , Terry D. Warfield","doi":"10.1016/j.jaccpubpol.2023.107122","DOIUrl":"10.1016/j.jaccpubpol.2023.107122","url":null,"abstract":"<div><p>This study examines foundation oversight authority as a distinct tool used to maintain the accounting profession’s delegated authority to set standards. Prior literature traditionally focuses on the standard-setting boards and technical arguments surrounding proposed accounting standards. We examine whether the Financial Accounting Foundation (FAF) can manage stakeholder conflict and legitimize contentious activity through exercise of its oversight role. The presented case is a qualitative analysis of the FAF’s <em>GASB Scope of Authority</em> project, a rare public exercise of FAF oversight authority, in which the FAF applied its authority despite stakeholder disagreement on the line between oversight and standard setting. We observe the FAF’s oversight of standard setting due process as opposed to the content of proposed standard setting projects. The policy formalizes private consultation at this blurred boundary to safeguard board autonomy and delegated authority. Implications and precedence for the FASB and other contentious accounting issues (e.g., deliberations around ESG reporting) are discussed.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107122"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0278425423000716/pdfft?md5=28af198166a32c9abbb21f2ec049e229&pid=1-s2.0-S0278425423000716-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135970740","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bradley P. Lindsey , Sophie McDonnell , William J. Moser
{"title":"Do United States Tax Court judge attributes influence the resolution of corporate tax disputes?","authors":"Bradley P. Lindsey , Sophie McDonnell , William J. Moser","doi":"10.1016/j.jaccpubpol.2023.107156","DOIUrl":"10.1016/j.jaccpubpol.2023.107156","url":null,"abstract":"<div><p>Corporate taxpayers can have economically meaningful disputes with the United States Internal Revenue Service (IRS) that ultimately involve the federal judiciary. In an attempt to reduce the number of corporate tax disputes going to trial and reduce the amount of time between when corporate taxpayers file a petition with the United States Tax Court (USTC) and resolution of the case, politicians and judges have placed greater emphasis on negotiated settlements as opposed to Tax Court trials. In this paper, we investigate whether the personal attributes of the Tax Court judge assigned to the case (political ideology, tenure on the bench and professional experience) influence corporate taxpayers and the IRS to reach a negotiated settlement or proceed to trial. Overall, our results show that Tax Court judges who are conservative, have private practice experience, have governmental legislative experience, and have longer tenure on the Tax Court bench are more likely to preside over disputes resolved through a negotiated settlement as opposed to going to a trial.</p></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"42 6","pages":"Article 107156"},"PeriodicalIF":3.6,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136128263","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}