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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

How prior trust moderates investor responses to restatements is unknown. We examine how societal trust affects the changes in institutional investors' shareholdings around a restatement. We consider two competing hypotheses based on the erosion of trust and confirmatory bias. We find the change in institutional investors' shareholdings around a restatement is more negative for investors from high trust areas compared to low trust areas, consistent with an erosion of trust where high trust institutional investors view the restatement as a violation of trust. Further analyses show that our findings vary with the regulatory or economic environment, type of institution, and type of restatement. Our results are also robust to different tests that address endogeneity and use alternative societal trust measures. Overall, we contribute to the literature by examining the role of societal trust in a dynamic setting where investors' trust-based beliefs about the credibility of accounting information are not realized. Data Availability: GSS Sensitive Data Files are not available from the authors. Persons interested in obtaining these data should contact the GSS at GSS@NORC.org. Other data are available from the public sources cited in the text. JEL Classifications: G11; G23; G41. [ABSTRACT FROM AUTHOR]

We examine whether the media has an indirect corporate governance effect on financial reporting quality (FRQ) that operates through auditors. This occurs because greater media coverage can magnify an auditor's business risk by exposing the auditor to more potential litigation and reputation damage if an audit failure occurs. We use a path analysis to examine the direct and indirect channels of media corporate governance. We find a positive association between media coverage and FRQ that is mediated by audit fees, and the results are stronger for firms with greater incentives to engage in earnings manipulation. In contrast, we find no evidence that the media has a direct corporate governance effect on FRQ. Our results show how the media's corporate governance reach can be extended by auditors who care about how media coverage impacts their risk level. [ABSTRACT FROM AUTHOR]

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1468-5957.2009.02175.x Byline: Wei Zhang (1), Steven F. Cahan (1) Keywords: stock option grants; nonrecurring accounting transactions; contracting information; corporate governance; labor market; growth opportunities Abstract: Abstract: We examine the effect of nonrecurring accounting transactions on stock option grants for a sample of US companies. After controlling for both the economic and corporate governance-related determinants of option grants, we find that the aggregate value of stock option grants is more positively related to nonrecurring gains than to nonrecurring losses. We also examine whether the asymmetric treatment of nonrecurring gains and losses arises because (1) information contained in the nonrecurring transactions is related to firms' long-term prospects, (2) weak corporate governance fails to curb more favorable executive pay arrangements, (3) executives possess superior bargaining power in the labor marketplace, and (4) firms have significant growth opportunities. While we find no support for the first explanation and some support for the third, we find more consistent support for the growth explanation and two factors related to the corporate governance explanation: director-executive duality and the frequency of board meetings. Author Affiliation: (1)The authors are respectively from the School of Business, SUNY at Albany, USA and the University of Aukland Business School, New Zealand. They thank an anonymous referee and the editor (Martin Walker) for helpful guidance. They also thank Jerry Bowman, Mike Bradbury, Dan Dhaliwal, David Emanuel, Raffi Indjejikian, Robert Knechel, Jilnaught Wong, seminar participants at the University of Auckland, and participants at the Financial Accounting and Reporting Section of the American Accounting Association 2005 Midyear Meeting for their comments and suggestions. Article History: (Paper received April 2007, revised version accepted September 2009) Article note: (*) Address for correspondence: Wei Zhang, School of Business, SUNY at Albany, 1400 Washington Avenue, Albany, NY 12222, USA., e-mail: wzhang@uamail.albany.edu

The demand and supply characteristics of New Zealand firms that create audit committees through 'best practice' membership guidelines are examined. Findings show that supply factors are more likely to lead to the voluntary establishment of audit committees with best practice compliance as opposed to demand characteristics.

The effect of investor protection on the efficient communication of private information about a company's future prospects through income smoothing is investigated. Earnings informativeness is more positively associated with income smoothing in countries with strong investor protection.

A study examining the extent to which managers are likely to resort to insider trading is presented. It is observed that managers who feel that their pay does not adequately reflect their performance are more likely to trade on private information that they have access to.

A study comparing the ex-date price reactions of stock dividends distributed when odd-lot transactions costs were charged to those issued when odd-lot were not evident, is presented.

The size and composition of the 10‐K file have changed dramatically since the mandatory adoption of XBRL. We re‐examine 10‐K file size as a readability proxy by decomposing 10‐K file size into its main components, which include XBRL, processed XBRL (a twin to XBRL that allows XBRL information to be accessed using viewer software) and text. We find that 10‐K file size reduces readability before XBRL's adoption in 2012 but enhances readability after adoption and that the XBRL‐related components can explain the reversal of this relation. As the XBRL‐related components only include financial statement information, our results indicate that more XBRL data improves users' understanding of the financial statements, which is in contrast to the text component of the 10‐K where a larger file size is associated with lower readability. As such, our study identifies financial statement readability as a distinct and important dimension of disclosure quality that has been overlooked in the prior literature. [ABSTRACT FROM AUTHOR]

INTRODUCTION Researchers have recently been able to provide more powerful tests of the political-cost hypothesis by using proxies for political costs which are more closely linked to the political arena [...]

We examine whether the practice of integrated reporting (IR) can reduce agency problems between managers and investors, resulting in lower agency costs. We construct a sample of firms that voluntarily use IR in practice, drawn from 35 countries, and find that firms that apply IR practice more extensively (high IR firms) are associated with lower levels of agency costs and more negative year-to-year changes in agency costs compared to other IR firms (low IR firms). We also find that the relation between the level of IR practice and agency costs is more negative in countries with a stakeholder orientation than in countries with a shareholder orientation. Additionally, the effectiveness of IR is more pronounced in diversified firms that face greater agency problems. Our results are robust in a series of additional tests that address endogeneity. Overall, our evidence is consistent with IR having a disciplining role for managers. [ABSTRACT FROM AUTHOR]

The degree of corporate social responsiveness (CSR) was found to be related to a company's willingness to reveal financial data after analyzing CSR indicators such as charitable donations, number of women executives, number of minority executives, disclosure of social programs, Sullivan Principle ratings and donations to political action committees. Therefore, the ethical principles of executives determine many apparently unrelated company decisions.

The ethical behavior of managers in the savings and loan (S&L) industry was examined. It was found that fraud was highly extensive in S&L companies wherein managers were less ethical in their disclosure of financial statements. Such finding confirms the well-accepted notion that unethical behavior has contributed greatly to the prevailing crisis in the S&L industry.