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We study a production lot-sizing problem inspired by a veterinary pharmaceutical plant in which demands are uncertain. First, we develop a deterministic capacitated lot-sizing model for the production of animal pesticides, performed in three machine-specific stages. Second, we propose a traditional robust optimisation formulation following the popular budget-of-uncertainty approach. Third, we derive a novel fragility-based approach that circumvents well-known issues with traditional robust optimisation approaches, such as the estimation of budgets of uncertainty, the over-conservatism of robust solutions and the sensitivity of solutions to the decision maker's risk attitude. The fragility-based approach is grounded in the idea of minimising violations, over the full uncertainty support, from a user-specified cost target. It avoids the estimation of budgets of uncertainty and produces less conservative solutions via explicit modelling of constraint violation. We demonstrate the effectiveness of our approach on instances built upon real data provided by our industrial partner, a major player in the Brazilian veterinary pharmaceutical sector. The results show that our fragility-based approach reduces average total costs across all instances and maintains greater model stability under different target estimations. It also preserves cost savings when bottlenecks are introduced in production and when inventory costs and capacities are varied. [ABSTRACT FROM AUTHOR]

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.)

Using a comprehensive sample of U.S. manufacturing firms from 1992 to 2015, I test for the association between accounting comparability and firm productivity. I posit that increased accounting comparability facilitates learning from peer firms ultimately increasing firm productivity. Results show that accounting comparability is positively related to firm productivity and that one channel for this relation is improvement in inventory management. In cross-sectional analysis, I find that the relation between accounting comparability and firm productivity is stronger when (a) peer firms exhibit higher productivity and provide more informative filings; (b) subject firms exhibit higher product similarity with peer firms and face stiffer competition, and (c) subject firms operate in industries characterized by higher accounting quality. [ABSTRACT FROM AUTHOR]

We provide evidence that the profitability of corporate insiders' trading decreases in the degree of asymmetric timely loss recognition (TLR) of their firms' financial reporting. Consistent with TLR reducing insiders' information advantage over outside shareholders regarding future negative news about the firm, we find that reduced insider trading profitability is mainly driven by (a) stock sales, as opposed to purchases; (b) the price change component of trading, as opposed to its volume; and (c) insiders' nonroutine trades, as opposed to less information driven routine trades. Although CEOs/CFOs are more likely to influence TLR, the effect is more pronounced for non-CEO and non-CFO insiders, inconsistent with reverse causality. Overall, our findings suggest that TLR reduces managers' ability to extract rents from investors via insider trading. [ABSTRACT FROM AUTHOR]

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.)

Under the Current Expected Credit Loss (CECL) model, banks should fully recognize expected lifetime credit losses upon loan origination while gradually recognizing interest revenues. This timelier recognition of losses versus gains (i.e., conditional conservatism) makes banks more capital constrained. To mitigate this, banks may (1) offset timelier credit losses by lowering conservatism in other earnings components and (2) reduce credit losses by demanding greater borrower conservatism. We find that, under CECL, banks increase conservatism in loan losses but decrease conservatism in other earnings components, making overall conservatism only marginally increase. In sharp contrast, their borrowers increase conservatism by 40 percent, and borrowers' increase is twice that of banks. This substantial spillover effect suggests that, by greatly increasing borrowers' conservatism, CECL may strengthen debt governance of a broad scope of firms in the economy, thereby having economy-wide consequences beyond the banking industry and potentially enhancing the stability of the entire economy. Data Availability: Data are publicly available from the sources identified in the study. JEL Classifications: G21; M41; M48. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to examine the impact of economic, environmental and social (EES) indicators of sustainability performance on accounting conservatism and the moderating effect of good corporate governance (GCG) on this relationship in European environmental, social and governance (ESG) firms. Design/methodology/approach: To test the study's hypotheses, this paper applied linear regressions with panel data from 136 European companies selected from the ESG index between 2015 and 2022. Findings: The results show a positive effect of economic and environmental sustainability scores on the accounting conservatism level. However, social score has a negative and significant effect on the level of accounting conservatism. The findings also show that GCG accentuates these effects. Research limitations/implications: The findings have several implications for companies, investors and academic researchers. For companies, EES reporting should be enhanced. For investors, sustainability performance is crucial in decision-making. The results show that exploring the interaction between sustainability performance scores and accounting conservatism is essential for academic researchers. Originality/value: This paper is motivated by the limited research on EES sustainability scores and accounting conservatism around GCG, hence its pertinence for companies seeking to improve information quality. [ABSTRACT FROM AUTHOR]

Purpose: This study examines the implications of real asset liquidity for accounting conservatism. We investigate whether the liquidity of a firm's physical assets mitigates lenders' demand for conservatism by increasing the amount lenders can recover if the firm is liquidated, a theoretical prediction in Göx and Wagenhofer (2009). Design/methodology/approach: We use an asset redeployability index as a proxy for firm-level real (physical) asset liquidity and adopt ordinary least squares (OLS) regressions in the test. We also investigate the differential impact of real asset liquidity on conservatism in two unique settings where lenders' demand for accounting conservatism varies (loan initiation and bank deregulation). Findings: We find that accounting conservatism decreases as real asset liquidity increases. The negative effect of real asset liquidity on conservatism increases as the quantity of the firm's real assets increases, and the negative association is strengthened when firms face high financing constraints and have access to public debt markets. The moderating effect of real asset liquidity on lenders' demand for conservatism increases (decreases) when real asset liquidity is more (less) important to lenders. Originality/value: This study provides direct empirical evidence for the theoretical prediction in Göx and Wagenhofer (2009). Prior research shows that real asset liquidity impacts a firm's capital structure and investment decisions (Campello and Giambona, 2013; Kim and Kung, 2017; Ortiz-Molina and Phillips, 2014; Williamson, 1988). We complement this literature by providing evidence that real asset liquidity also plays a role in financial reporting by reducing accounting conservatism. [ABSTRACT FROM AUTHOR]

We examine the effect of auditing on dividends in small private firms. We hypothesize that auditing can constrain dividends by way of promoting accounting conservatism. We use register data on private Norwegian firms and random variation induced by the introduction of a policy allowing small private firms to forgo the use of an auditor to estimate the effect of auditing on dividend payout. Identification is obtained by a regression discontinuity around the arbitrary thresholds for the policy. Propensity score matching is used to create a balanced synthetic control. We consistently find that forgoing auditing led to a significant increase in dividends in small private firms. [ABSTRACT FROM AUTHOR]

The past performance and the capital structure of the companies that are involved in mergers and acquisition (M&As) are considered into the analysis of the circular causality relationship between financial performance and market value. Considering two models, one for value relevance and one for accounting conservatism, this paper aims to analyze if the capital market influences the accounting practices of a target company or that the accounting figures influence the capital market. The analyzed sample used in the study is represented by the target companies involved in M&As which took place in the European Union Enlarged in 2017–2018. Financial and market data were considered for eight years (2011–2018). Using the conservatism model, the results show that targets' earnings are significantly influenced by their financial leverage as an indicator for financial structure. Using the value relevance model, the capital market reaction is influenced by prices and return on equity that indicates the capital market influence on accounting figures. [ABSTRACT FROM AUTHOR]

Financial flexibility occurs when companies borrow less than expected and is widely practiced. A commonly used model to establish the presence of financial flexibility is based on the determinants of the leverage model, which was developed some time ago and is composed of various factors that determine a company's leverage use. Governmental borrowing and financial sector development in the meantime were shown to be key drivers of corporate borrowing. We add these two factors to the original model to establish how the prevalence of financial flexibility is affected by these inclusions into the model. South Africa is used as a locality for the study because of its relatively recent financial sector development and increased governmental borrowing. The results of the study show that financial flexibility is more prevalent when these factors are considered in a South African context. Previous studies have paradoxically shown a lower financial flexibility prevalence in South Africa when compared to a developed market such as the UK, which is contradictory to developing market debt conservatism. In this study, we show that when accounting for financial sector development and governmental borrowing, financial flexibility is widely prevalent in a South African context, at similar levels to that of a developed economy. The primary implication of the study's findings is that financial flexibility may have been underreported in developed markets in prior studies. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to study the impact of earnings quality on firms' financial performance. Design/methodology/approach: An unbalanced panel data of 237 small- and medium-sized Portuguese companies from the mold industry, using 2010–2018 yearly data was analyzed. While most studies focus only on earnings management when assessing earnings quality, in this study six proxies for earnings quality are used, namely, accruals quality (a proxy for earnings management), earnings persistence, earnings predictability, earnings smoothness, earnings timeliness and earnings conservatism. Moreover, two proxies of financial performance are considered, the return on assets and the economic value added. An econometric model was estimated using either a fixed-effects or a random-effects specification to account for the individual firm-specific effects and ensure heteroscedasticity corrected estimates. Findings: The results show that managers must be concerned with the quality of reported earnings, as it can affect positively firms' financial performance, especially regarding accruals quality. Persistence, predictability, smoothness, timeliness and conservatism are shown not to exert significant influence on financial performance in the sample. Research limitations/implications: This work contributes not only as a literature review on these thematic but also to firms' managers and stakeholders, who have information that helps them select strategies that guarantee earnings quality and improve firms' financial performance. Originality/value: This study proposed an econometric model that studies the relationship between earnings quality (using several proxies for it) and financial performance that can be applied to all companies. [ABSTRACT FROM AUTHOR]

We study the role and influence of Chief Accounting Officers (CAOs) by examining the relation between the presence of a CAO on the top management team and asymmetric timely loss recognition (ATLR). Using large‐sample data from 10‐Ks and proxy statements of S&P 1500 firms, we find that the presence of a CAO is positively associated with the level of ATLR and that this positive relation is more pronounced when the Chief Financial Officer (CFO) does not have an accounting background. Our difference‐in‐differences analysis further indicates that the level of ATLR increases significantly following the initial appointments of CAOs. The results are robust to propensity score matching, alternative ATLR models, and various control variables. Collectively, our findings suggest that adding an accounting chief to the C‐suite has a significant impact on financial reporting practices. [ABSTRACT FROM AUTHOR]

This study examines the effect of manager sentiment on conditional conservatism. Manager sentiment refers to widely held beliefs of financial managers about their firms' future economic prospects that are not justified by available economic fundamentals. Manager sentiment is likely to affect conditional conservative reporting because the decision to recognize unrealized economic losses in a timely manner flows from financial managers' beliefs about their firms' future cash flow prospects. We predict and find that manager sentiment is negatively associated with conditional conservatism, indicating that firms report less conservatively during periods of high manager sentiment (over‐optimism) and more conservatively during periods of low manager sentiment (over‐pessimism). Moreover, the effects of manager sentiment on conditional conservatism remain strongly negative after controlling for manager overconfidence. We further find that asset write‐offs are lower during high sentiment periods but higher in subsequent periods. Importantly, the manager sentiment effect on conservatism is incremental, and the opposite in sign, to the effect of investor sentiment, which has not been demonstrated in prior literature. [ABSTRACT FROM AUTHOR]

It is pertinent to understand how CEO optimism and accounting conservatism influence earnings management to verify the reliability and accuracy of financial reporting. The motivation behind this research comes from the possible implications for financial transparency, regulatory oversight, and investor trust while focusing on the usefulness of corporate governance. The research explores the influence of CEO optimism and accounting conservatism on earnings management within Asian emerging economies, analyzing data from listed manufacturing firms between 2010 and 2022. The study finds a negative correlation between accounting conservatism and earnings management while CEO optimism positively correlates with earnings management. These findings imply that conditional conservatism diminishes the possibility for management to inflate earnings. However, CEO optimism increases the likelihood of a firm's earnings management. This research ought to offer a thorough understanding of accounting conservatism and CEO optimism and the effect that these factors have on earnings management from the context of Asian emerging economies. [ABSTRACT FROM AUTHOR]

I endorse five central themes of Charlotte Witt's Social Goodness: the pervasiveness and irreducibility of social roles and norms; normative externalism; the artisanal model; a richer social ontology; and the possible critical transformation of social norms from within. I reframe these themes within the biological account of the evolution and development of human ways of life in Joseph Rouse's Social Practices as Biological Niche Construction. Witt's social analysis attends to human bodies as loci of artisanal skills and social salience as gendered, sexed, and raced, but not to bodies as vulnerable, dependent organisms in social environments. A broader, biological conception of normativity shifts from Witt's focus on social roles and norms to the dynamics of social practices as shaping people's developmental environments. This more complex account of social dynamics enriches Witt's conservative account of how practices are transmitted and sustained. It thereby surpasses limitations in her account of how hierarchical social norms can be both obligating and open to critical challenge from within. It does so in three ways: by emphasizing normative conflicts within practices, by shifting from individual know-how to discursive practices as loci of artisanal authority, and by an account of power relations as intertwined with biosocial normativity. [ABSTRACT FROM AUTHOR]

Purpose: Our study aims to explore the ownership structure and accounting conservatism in influencing the value relevance that we analyse through the paradigm of open innovation and socio-emotional wealth (SEW). We also extended the test to identify how firm size could affect value relevance. Design/methodology/approach: Through panel data testing, we collected all issuers on the stock exchange for the 2016–2018 period. The total collected observations are 735 observations from various industries. Findings: The results of the study provide empirical evidence that institutional ownership is more pronounce, especially in companies with high asset levels. We also conducted other tests to see it from the perspective of SEW. We divide companies into family and non-family companies. The results of this study indicate that institutional ownership has an effect on increasing value relevance, especially in family companies compared with non-family companies. The results of the study also indicate that accounting conservatism plays a more important role in increasing value relevance in non-family firms compared to family firms. Originality/value: This study advances in two main ways. First, we use a SEW approach and an open innovation perspective. Second, we conducted tests for family and non-family firms. [ABSTRACT FROM AUTHOR]

Accounting conservatism has been described as deriving from preferences for reporting errors to be in the direction of understatement rather than overstatement. We pair reporters with users (who rely on reporters' information) in a multiperiod experiment. We posit that, under misaligned incentives that motivate aggressive reporting, users view aggressive reports as reflecting exploitative intent and expect that a norm prohibiting aggressive reporting applies. We predict that users use noisy reporting errors to gauge reporters' norm compliance. We find that, ceteris paribus, users prefer not to be paired with reporters producing overstatement errors likely to reflect aggressive reporting relative to reporters producing understatement errors likely to reflect conservative reporting; alternatively, we find no such asymmetric preferences when the agents' motives are aligned. The asymmetric preferences cannot be explained by agency theory predictions of payoff maximization or loss aversion. These moral preferences provide an initial condition from which conservatism can endogenously emerge. Data Availability: Data are available from the authors upon request. JEL Classifications: B52; D81; D82; M41. [ABSTRACT FROM AUTHOR]

Copyright of Hacettepe University Journal of Economics & Administrative Sciences / Hacettepe Üniversitesi Iktisadi ve Idari Bilimler Fakültesi Dergisi is the property of Hacettepe University, Faculty of Economic & Administrative Sciences 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.)

Recent studies show two important factors in the nonlinear behavior of cost and profit. The first factor is cost stickiness, which expresses economic asymmetry in the reaction of cost to increase and decrease in sales. The second factor is related to accounting conservatism, which indicates the asymmetry of financial reporting in identifying good news versus bad news. Although conservatism and cost stickiness are conceptually based on two different and separate phenomena, but they create two similar patterns in the temporal asymmetry of profits. This study examines the relationship between cost stickiness, levels of conservatism and firm life cycle. In this research, by using the combined data technique and by using three models of non-operating accrual items, Basu’s model and market value model, and with a sample consisting of 113 companies admitted in the Tehran Stock Exchange during the years 2010-2019, this goal has been investigated. The research results indicate that the stickiness of costs is related to conservatism in all three models. The findings of the research show that in the growth stage between cost stickiness and conservatism of companies, there is a significant negative relationship in all three models, of which Basu’s model has more explanatory power. In the maturity stage, there is a negative and significant relationship between the stickiness of costs and the conservatism of companies in the Basu’s model and non-operating accruals, but no significant relationship has been observed in the market value model. In the recession stage, the effect of cost stickiness on the reduction of conservatism is significant only based on the market value model. Finally, in the decline stage, no significant relationship was found in any of the three models. [ABSTRACT FROM AUTHOR]

We study optimal accounting rules that alleviate inefficiencies caused by managerial private benefits. Accounting signals generated by the accounting rules guide the continuation decision at an interim project stage. The entrepreneur enjoys private benefits from continuation, which may induce inefficient decisions. The optimal accounting rule is characterized by a threshold, with a higher threshold representing more conservative accounting. The first-best is achieved under small private benefits. As private benefits increase, the first-best eventually is not achievable and more informative bad news is required for the manager to terminate, resulting in less conservative accounting rules. Therefore, more conservative accounting rules are associated with more efficient investment decisions. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2019.03087. [ABSTRACT FROM AUTHOR]

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.)

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.)

This article explores the concept of audit quality and the challenges in defining and measuring it. It presents different perspectives on audit quality and argues that audit outcomes, such as audit reports and the quality of audited financial statements, are the most relevant basis for assessing audit quality. The article suggests that audit quality should be understood in terms of the quality of the audit report and the audited financial statements, rather than solely focusing on the audit process. It concludes that audit quality is a multi-dimensional concept with multiple attributes and proposes a more nuanced approach to assessing it. The article also highlights the importance of earnings quality in evaluating the quality of audited financial statements and suggests using financial statement quality as an indicator of auditor and audit report quality. It emphasizes the need for auditors to carefully review and constrain aggressive accounting choices, particularly in relation to accrual estimates. The article concludes by recommending the inclusion of additional information in audit reports that compares a client's accounting policies and estimates to industry norms. [Extracted from the article]

Copyright of Journal of Accounting & Auditing (2314-4793) is the property of Beni Suef University 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.)

This study investigates how institutional ownership influences investment efficiency, using accounting conservatism as an intermediary factor, the study examines nonfinancial firms listed on the Indonesia Stock Exchange for the period from 2018 to 2020. The sample comprises 102 firms chosen via stratified random sampling. Annual report data from the companies were assessed through path analysis, revealing that institutional ownership positively influences accounting conservatism, which in turn positively affects investment efficiency. However, institutional ownership alone does not significantly impact investment efficiency. Accounting conservatism has been shown to mediate the connection between institutional ownership and investment efficiency. [ABSTRACT FROM AUTHOR]

This study examines the governing role of gender diversity on the board of directors on conditional accounting conservatism and executive remuneration. Using proprietary data about women representation on the board of directors to investigate the impact on the choice between accounting methods and the structure of executives remuneration. A sample of listed firms on the London Stock Exchange from 2019 to 2022 is used. The results first document that firms exhibit a higher level of conditional accounting conservatism when women represent a larger fraction of the board. The analyses further establish different relationships between performance-based versus equity-based remunerations and conditional accounting conservatism. Last, the results show that women representation is related to pay out policy and its impact on conditional accounting conservatism. The findings also offer novel insights on the governing role and consequences of gender diversity of woman chairperson and/or woman CEO. Overall, contrary to notions of opportunistic behavior of executives, the results find that boards achieve more level of governance with more women representation. [ABSTRACT FROM AUTHOR]

This paper focuses on firms in which insiders pledge their shares as collateral for loans. By investigating a natural experiment—China's enactment of provisions on share reductions that restrict pledge creditors' cashing-out behavior—we find that pledging firms exhibited more conservative financial reporting after the implementation than non-pledging firms. This effect was pronounced in firms with a higher ratio of pledged shares, a longer maturation period of the pledged shares, and more concentrated pledge creditors. Additionally, we show that pledging firms increased their accounting conservatism after the shock, leading to a lower risk of margin calls and stock price crashes. The effect on accounting conservatism was stronger in firms with controlling pledgers or when the pledge creditors were banks. Our results remained consistent after we performed several robustness tests. These behaviors are economically logical because the provisions heighten creditors' liquidity risk and the potential losses of loan default. Pledging shareholders embrace more accounting conservatism to mitigate creditors' concerns about agency costs and avoid triggering margin calls. Our findings provide direct support that creditors have a real demand for accounting conservatism and highlight the impact of shareholder-creditor conflicts on the financial reporting policies of pledging firms. [ABSTRACT FROM AUTHOR]

The purpose of this study is to examine the impact of the global financial crisis on accounting conservatism. Accordingly, the financial data of companies traded on Borsa Istanbul between 2005 and 2012 are analyzed. The financial data of the companies included in the analysis were obtained using the Public Disclosure Platform and Thomson Refinitiv Datastream program. In the study, 2005-2007 periods were categorized as pre-crisis period, 2008-2009 periods as crisis period and 2010-2012 periods as post-crisis period. In the study, the ratio of market capitalization to book value and C score are used to measure accounting conservatism. Unit root and multicollinearity tests were conducted for the variables used in the analysis. Panel data analysis and Driscoll-Kraay robust estimator are used to determine the impact of the crisis on conservatism. The findings show that the global financial crisis has an impact on the level of accounting conservatism, that the level of conservatism decreased during the crisis period, and increased more post-crisis period compared to the pre-crisis and crisis period. In the study, a negative relationship was found between the financial crisis period and accounting conservatism, while a positive relationship was found in post-crisis period. [ABSTRACT FROM AUTHOR]

This article provides empirical evidence on the zero-leverage phenomenon for a sample of European listed firms for the period 1995-2016. It is shown that there are two types of firms with zero leverage: the financially constrained firms that face obstacles in obtaining external finance, as predicted by the financial constraints hypothesis; and the financially unconstrained firms that maintain zero leverage as a consequence of a financing decision, which supports the financial flexibility hypothesis. The zero-leverage phenomenon is also influenced by the financial system that prevails in each country, being boosted (inhibited) in market-based (bank-based) financial systems, and by the country's macroeconomic conditions, with the recent financial and sovereign debt crises increasing the propensity for zero leverage in marketbased countries. We also find that the financial flexibility hypothesis seems to be more important in market-based systems and that the financial constraints approach did not gain importance during the crisis period. Our results are robust to the use of alternative measures of debt conservatism, explanatory variables, and econometric methods and maintain their validity when we allow for endogeneity in firm size and dividend payments. [ABSTRACT FROM AUTHOR]

Regret minimization has gained popularity in a wide range of decision-making problems under uncertainty because of its capacity to identify more opportunistic solutions than worst-case value optimization. Unfortunately, the rigidity of current worst-case regret models and scarcity of tractable solution methods have been serious obstacles in multistage applications. In "Risk-Averse Regret Minimization in Multistage Stochastic Programs," M. Poursoltani, E. Delage, and A. Georghiou consider a multistage stochastic programming setting with a discrete scenario tree. They introduce the notion of the Δ-regret model, which bridges between the ex ante and ex post regret minimization paradigms that are currently used in the regret minimization literature for single-stage problems. The notion of Δ-regret minimization is investigated for the first time both theoretically and numerically in order to better understand its behavior under a set of popular risk measures. Within the context of optimization under uncertainty, a well-known alternative to minimizing expected value or the worst-case scenario consists in minimizing regret. In a multistage stochastic programming setting with a discrete probability distribution, we explore the idea of risk-averse regret minimization, where the benchmark policy can only benefit from foreseeing Δ steps into the future. The Δ-regret model naturally interpolates between the popular ex ante and ex post regret models. We provide theoretical and numerical insights about this family of models under popular coherent risk measures and shed new light on the conservatism of the Δ-regret minimizing solutions. Funding: This work was supported by Natural Sciences and Engineering Research Council of Canada [Grant RGPIN-2016-05208], the Canada Research Chair program [Grant 950-230057], and the Fonds de recherche du Québec–Nature et technologies [Grant 271693]. Supplemental Material: The e-companion is available at https://doi.org/10.1287/opre.2022.2429. [ABSTRACT FROM AUTHOR]

Purpose: The main aim of the present study is to assess the moderating effect of joint audit (JA) on the relationship between audit committee effectiveness (ACEFF) and audit quality (AQ) in Egypt. Design/methodology/approach: The sample included 61 non-financial corporations listed on the Egyptian Exchange from 2016 through 2020. The results are estimated using panel data analysis with fixed-effect models. Findings: The findings exhibit that audit committee (AC) independence, ACEFF; and audit firm size negatively affect AQ. Conversely, the influence of AC meetings on AQ is positive and significant. The findings also reveal that JA moderates the relation between the ACEFF and AQ. Research limitations/implications: The study offers theoretical contributions to corporate governance mechanisms, JA; and AQ by using data from listed firms in Egypt. The study is the first one that examines the moderating role of JA on ACEFF and AQ. Practical implications: The study has practical implications for investors, board members, practitioners, academicians; and policymakers. Moreover, the study contributes using a composite measure for the ACEFF score. Originality/value: The findings, supported by agency, resource dependence; and signaling theories, contribute to a better understanding of the relationship between ACEFF, AQ; and JA. The evidence about JA is still unknown in developing countries. Further, revisiting AQ with different measures, particularly accounting conservatism, has not been a subject of prior studies. [ABSTRACT FROM AUTHOR]

Prior studies show that engaging in conservative financial reporting (CON) positively affects earnings quality. However, managers also manage earnings to meet/beat market earnings expectations (MBME). This study asks three questions regarding the earnings that MBME. First, it investigates whether managers are willing to sacrifice CON when adopting strategies to MBME. Second, it tests whether managers prefer to use other earnings management (EM) strategies to MBME instead of sacrificing CON. Third, it tests whether information asymmetry between managers and shareholders affects managers' decisions to sacrifice CON. Results show that managers are more likely to sacrifice CON to MBME but are less likely to do so if they can manage earnings using accrual-based or real EM. Also, managers are more likely to do so when information asymmetry with shareholders is higher. These findings contribute to the literature by examining the circumstances in which managers would sacrifice CON to MBME. [ABSTRACT FROM AUTHOR]

Purpose: This research endeavors to assess the influence of financial shared service centers (FSSCs) on the quality of accounting information within China's A-share listed companies. Using a multi-period difference-in-differences (DID) model, the study aims to empirically examine the correlation between the adoption of FSSCs and the quality of accounting information. Design/methodology/approach: The study uses a robust methodology to evaluate the relationship between FSSCs and accounting information quality (AIQ). Leveraging the established FSSCs within China's A-share listed companies as the treatment group, this research adopts a multi-period DID model. This approach enables a rigorous empirical examination of the influence exerted by FSSCs on the overall quality of accounting information. Findings: The present study delves into the impact of FSSCs on AIQ and conducts empirical analysis using data from Chinese A-share listed companies between 2004 and 2021. The findings substantiate that: FSSCs significantly bolster the quality of accounting information, a conclusion retained even after robustness tests. Specifically, FSSCs exhibit a positive correlation with the comparability, timeliness and disclosure quality of accounting information while demonstrating no significant influence on relevance, robustness and reliability factors. Research limitations/implications: First, the analysis primarily rests upon data from Chinese A-share listed companies between 2004 and 2021, potentially constraining the generalizability of findings across diverse contexts. Second, despite controlling for various factors, unobserved variables or external factors not encompassed in the model might influence the relationship between FSSCs and AIQ. Additionally, the study's reliance solely on quantitative data confines exploration into qualitative aspects that might offer a more comprehensive understanding of FSSCs' impact on AIQ. Practical implications: This paper establishes a nuanced connection between FSSC operations and AIQ, furnishing direct empirical evidence for their economic implications and propounding a novel avenue for augmenting AIQ. And, it furnishes guidance for forthcoming FSSC development, accentuating the necessity of harnessing information technology to enhance the relevance, reliability and robustness of accounting information. Originality/value: Majority of prior empirical studies assessing AIQ have focused on singular indicators, lacking a comprehensive depiction of its overall level. To address this gap, this paper pioneers the construction of a comprehensive index for AIQ, providing a holistic representation of its level. Furthermore, this study stands as the inaugural investigation into the relationship between China's A-share listed firms' FSSCs and the quality of accounting information. [ABSTRACT FROM AUTHOR]

This study examines the effects of presidential elections (PEs) on firms' accounting conservatism in Korea. The Korean president exerts great influence on the government's financial, monetary, subsidiary, and regulatory policies. At the same time, however, the Korean constitution prohibits the re‐election of the incumbent president. This simultaneously strong and fragile presidential system creates unique political uncertainty, which deteriorates the information gap between firms' insiders and outsiders. According to the efficient contracting channel, accounting conservatism is expected to relieve information asymmetry by recognizing the economic losses faster than economic gains. But we posit that the effectiveness of accounting conservatism depends on the information environment within which they operate. If the information environment facilitates a compensation system for an increase in accounting conservatism under high uncertainty, managers may prefer to expand conservative accounting practices. However, if there is no such incentive mechanism, managers may opt to suspend accounting conservatism because the cost of revealing bad news increases during periods of uncertainty. Test results show that PEs encourage managers to delay rather than expedite the timely recognition of economic losses. This negative effect becomes more pronounced in firms with higher reliance on government contracts than firms with lower such reliance. We also find that Korean chaebol‐affiliated firms are likely to increase accounting conservatism during PEs. In general, US‐based studies support the positive relationship between information asymmetry and accounting conservatism, while this study demonstrates that this relationship can be reverse depending on the institutional environment. [ABSTRACT FROM AUTHOR]

Recent studies show that the tax‐induced lock‐in effect discourages CEOs from unwinding their unrestricted equity and subsequently exacerbates their risk‐aversion. I investigate how CEOs' unrealized capital gains tax liabilities (tax burdens) influence financial reporting conservatism. I find that the demand for accounting conservatism decreases with CEO tax burdens. Further analyses show that the negative relation between CEO tax burden and conservatism is stronger when the firm has high leverage and high default risk and when the CEO's incentives are more aligned with equity holders. This highlights the shareholder–creditor agency conflicts mitigation role of CEO tax burdens in reducing creditors' demand for conservatism. I exploit the Federal Taxpayer Reform Act of 1997 and staggered state‐level tax cuts that significantly decreased personal capital gains tax rates as identification strategies. [ABSTRACT FROM AUTHOR]

Generalist chief executive officers (CEOs) have accumulated transferrable general skills by working in multiple firms or industries. Recent decades have witnessed an increasing demand for generalist CEOs, which has resulted in a favorable job market for them. Favorable outside job opportunities reduce generalist CEOs' career concerns and increase their agency problems and risk‐taking incentives. We examine the relation between generalist CEOs and conditional conservatism. On the one hand, conditional conservatism could be positively associated with generalist CEOs because debtholders and shareholders often demand conservatism to alleviate heightened agency problems. On the other hand, a negative association could obtain because generalist CEOs can (1) create better information environments for firms, reduce information asymmetry and lessen stakeholders' demand for conservatism and (2) have greater bargaining power and reduce the supply of conservatism. We document a positive association between generalist CEOs and conditional conservatism and show that the relationship is more pronounced in firms with a higher demand for conservatism. Our results are robust to a variety of sensitivity tests. [ABSTRACT FROM AUTHOR]

This study investigates the effects of cross- and stable shareholdings on the relationship between accounting quality and trade credit in Japan. Cross- and stable shareholdings are well-known features of Japanese corporate governance, as a private information-sharing system. The results indicate that the trade credit of customers without either cross- or stable shareholdings increases with accounting quality, and in most cases, such shareholdings weaken the relationship between accounting quality and trade credit. These findings suggest that close ties to cross- and stable shareholders reduce the importance of accounting information through sharing private information. The findings will enhance the understanding of ownership structure's potential impact. Overall, this study contributes to the literature by demonstrating the role of accounting quality in financing and the factors that reduce this role. In addition, this study highlights policy implications for the regulatory initiatives to unwind cross-shareholdings, which may affect private information sharing. Data Availability: Data are available from sources indicated in the text. JEL Classifications: G34; M41. [ABSTRACT FROM AUTHOR]

This study analyzes the pivotal role of the budget process in effective accounting management and advocates for tailored strategies to fortify Vietnamese enterprises amidst global competition, thereby charting a course towards sustainable development. It delves into the intricate relationship between budget process and accounting approaches within Vietnamese enterprises, highlighting their crucial role in achieving sustainable growth and prosperity. Effective management of this interplay, including elements such as the Budget Process, Planning, Implementation, and Control, is essential for optimizing Accounting Management for Vietnamese Enterprises. Tailored strategies are emphasized as vital tools for navigating the challenges posed by global competition, enabling enterprises to pursue sustainable development objectives. By integrating budget process with accounting practices, businesses can enhance strategic decision)making and position themselves for success amidst dynamic market conditions. Overall, the study underscores the necessity for Vietnamese enterprises to align these two domains to unlock their full potential for sustained success, driving long-term prosperity and growth in the contemporary business landscape. This research also provides theoretical groundwork for future researchers as well as businesses to apply for adjustments in budget management to enhance the effectiveness of administrative operations. [ABSTRACT FROM AUTHOR]

This study focuses on exploring the factors influencing why companies engage in greenhushing decisions in the cultural backgrounds of China and Republic of Korea. Structural equation modeling analysis indicates that in these two countries, reputational risk not only directly leads to corporate greenhushing behavior, but also exerts its influence through conservatism as a mediating factor. Reputational risk causes companies to exhibit conservatism, which in turn leads to the adoption of greenhushing behavior. Furthermore, tests for moderation effects revealed that, in the Chinese sample data, a transparent information disclosure mechanism has the ability to mitigate the impact of reputational risk on corporate greenhushing behavior, as well as to alleviate the influence of conservatism on corporate greenhushing behavior. In the South Korean sample data, a transparent information disclosure mechanism can moderate the impact of reputational risk on conservatism and corporate greenhushing behavior. Finally, the fsQCA method is tested to derive the different configurations and pathways that lead to the strong emergence of greenhushing behavior in companies in China and Republic of Korea, as well as to identify the most influential pathways. This study provides substantial theoretical support for further exploration of the causal mechanisms of corporate greenhushing behavior and promotion of cross‐cultural comparisons and learning in the international environmental management field. In addition, provides rich empirical support and theoretical guidance for corporate environmental management decision‐making and policy formulation. The findings highlight the further standardization and strengthening of transparent information disclosure mechanisms will be an important direction for future environmental policy development. [ABSTRACT FROM AUTHOR]

This monograph investigates the role of conservative accounting in capturing various types of uncertainty in a firm's operations and assesses how the resulting financial data can be harnessed to gauge risk and forecast stock returns. It challenges the conventional approach of employing cross-sectional return regression for empirically identifying financial ratios as "risk factors," suggesting this methodology is fundamentally unsound. An accounting measure may help estimate the expected stock return of a firm, but it does not necessarily reflect any inherent risk in the firm's operations. The study differentiates between conditional and unconditional conservative accounting practices, highlighting how they capture different facets of uncertainty and thereby lead to varying relationships between financial data and expected stock returns. The monograph further substantiates its claims with empirical evidence based on dissecting the market-to-book premium according to the accounting principles employed. [ABSTRACT FROM AUTHOR]

Alternative Estimation Methods - Documenting that the reported relationship between accounting conservatism and bankruptcy risk is robust to alternative methods for estimating bankruptcy risk and bankruptcy risk components. By increasing bankruptcy risk and decreasing monitoring and accounting conservatism simultaneously, CDS contracts may weaken or eliminate negative relations between conservatism and bankruptcy risk. The potential of SOX enactment to thereby enhance accounting conservatism's effects on bankruptcy risk must take into account SOX related and contemporaneous effects on bankruptcy risk. Alternative Measures for Accounting Conservatism and Bankruptcy Risk B - b Documenting that the reported relationship between accounting conservatism and bankruptcy risk is robust to using alternate measures of accounting conservatism and alternative measures of bankruptcy risk including actual bankruptcy. [Extracted from the article]

Purpose: The authors examine the effect of climate risk on accounting conservatism for a sample of listed companies operating in 26 developing countries. Design/methodology/approach: The authors employ the Climate Risk Index (CRI) developed by Germanwatch to capture the severity of losses due to extreme weather events at the country level. The authors use different approaches to measure firm-level accounting conservatism. Findings: The authors find that greater climate risk leads to a lower level of accounting conservatism. The results hold even after using different estimation methods. Research limitations/implications: Although the authors' analysis is limited to the period 2007–2016, it could be helpful for standard setters such as International Accounting Standards Board (IASB) and International Sustainable Standards Board (ISSB) as they may consider the potential effect of climate risk in their international standards. Practical implications: The negative impacts of climate risk on the quality of financial reporting as proxied by accounting conservatism could trigger regulators and standard setters to require disclosure of information relating to climate risks and to incorporate climate-related risks in their risk management systems. In addition, for policymakers, incorporating accounting conservatism as a financial quality reporting standard could help promote greater transparency, accuracy and reliability in financial reporting in the context of climate risk. Originality/value: The authors add to the literature on international differences in accounting conservatism by showing that climate risk significantly affects unconditional and conditional conservatism. The authors' results provide fresh evidence of the dark side of climate change. That is, climate risk is shown to decrease financial reporting quality. [ABSTRACT FROM AUTHOR]

Purpose: Prior research shows that religiosity affects the degree of managers' risk aversion. As a result, religious firms are less likely to invest in R&D activities. Moreover, US GAAP treats these investments as expenses. For this reason, religious firms have fewer expenses in their earnings and are less likely to be in financial distress. Design/methodology/approach: Data are collected from Worldscope and the Churches and Church Membership files of the American Religion Data Archive website from 1985 to 2018. With 18,199 observations in US context, the authors used the marginal effect to test the mediating effect of R&D accounting treatment. Findings: The authors find that the marginal effect of religiosity on financial distress with US GAAP is higher than the marginal effect of religiosity on financial distress with capitalization of R&D costs, which means that accounting treatment can explain the relation between religiosity and financial distress in the US context. Research limitations/implications: The authors used linear interpolation and linear extrapolation data to be able to conduct this research over a period of 1985–2018. For future researches, the authors propose to test other factors which can explain the relationship between religiosity and financial distress based on the ethics element. Practical implications: These results should be of interest to regulators because treating R&D activities as expenses can destroy the accounting performance of firms that prefer investing in risky projects. This favoritism prevents the comparison between two firms in the same industry with different risk-taking behaviors. This problem is more prevalent if the authors have two firms with different ratios of religiosity. This paper suffers from a major limitation related to data availability. Originality/value: This may be the first study that investigates why religious firms are less likely to be in financial distress. This paper notes that religious firms are less likely to be in financial distress because their conservative behavior towards R&D activities coincides with the conservative R&D accounting treatment. In fact, the mismatch between expenses and revenues from R&D activities can cause financial distress. [ABSTRACT FROM AUTHOR]

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SUMMARY: We examine whether firms undertaking an initial public offering (IPO) exhibit less earnings management when individual investment bankers have prior experience in public accounting. Although auditors are primarily responsible for providing external monitoring of the financial reporting process, individual bankers also have strong incentives to improve accounting quality in firms going public. We predict a negative relation between public accounting experience and IPO firms' earnings management because working in public practice fosters individual bankers' accounting expertise and conservative personalities. In exploiting unique disclosures of investment bankers' identities and characteristics in China, our analysis indicates that bankers with early-career public accounting experience constrain IPO firms' accrual-based earnings management. Consistent with expectations, we find that this evidence is more pronounced if the accounting firm that employed the future investment banker is larger, is permitted to audit listed companies, and was previously subject to a regulatory sanction. Data Availability: Most data are publicly available from the sources identified in the paper. Hand-collected data from the Securities Association of China (SAC) can be made available upon request. JEL Classifications: G24; M41; M42. [ABSTRACT FROM AUTHOR]

Background: The importance of intellectual capital for stakeholders in making investment decisions, along with the role of accounting conservatism for management, investment becomes a decision that is well-considered and measurable. Thus, through this research, investors are expected to be able to make their investment decisions well in the future. Purpose: This study aims to determine the relationship between accounting conservatism, intellectual capital, and capital structure in achieving financial performance. Design/methodology/approach: This study uses a quantitative method with a linear regression model and panel data. A total of 190 data have been obtained for five years based on certain characteristics. Through the Chow, Hausman, and Lagrange tests, the results are obtained in the form of a random effect, which will be used in the next test. Findings/Result: The results reveal that accounting conservatism has a significant influence on achieving financial performance, as well as intellectual capital and capital structure also have a significant influence on financial performance. Conclusion: There is a significant positive relationship between intellectual capital and firm value in the consumer goods sector listed on the Indonesia Stock Exchange. This indicates that intellectual capital plays an important role in creating value for the company and its stakeholders. In addition, accounting conservatism was found to be important in monitoring the company's investment decision-making. The findings of this study can provide insights for stakeholders on how the examined variables influence firm financial performance and aid in making investment decisions in the consumer goods sector in Indonesia, especially during the COVID-19 pandemic. Originality/value (State of the art): To explore the relationship between intellectual capital, accounting conservatism, and their impact on financial performance in the Indonesian consumer goods sector. Additionally, the research examines other factors, such as technological innovation, social responsibility, and supply chain management, and their influence on financial performance. The study also delves into factors that contribute to economic prosperity in emerging market economies, particularly in Indonesia, which may aid investors and policymakers in making well-informed decisions. The research employs advanced methodologies, including panel data regression analysis with robust standard errors, and builds on existing literature in financial performance and intellectual capital in emerging market economies. Ultimately, this research contributes to the advancement of the field and provides a foundation for future research. [ABSTRACT FROM AUTHOR]

Based on a sample of Chinese public manufacturing firms, this study empirically investigates whether and how analyst coverage drives corporate social responsibility (CSR) under different governance or information conditions. The results show that firms with greater analyst coverage take more social responsibility, representing magnified concerns and better CSR visibility for legitimacy and reputation. This relationship could be strengthened under high governance condition (high institutional ownership ratio, none CEO duality, low executive ownership) or low information situation (high earnings management and low accounting conservatism). These findings provide new evidence of information-based mechanism underlying the promotions of CSR in imperfect information environments. [ABSTRACT FROM AUTHOR]

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This research investigates how corporate social responsibility (CSR) affects the connection between accounting conservatism and investment efficiency. The study focuses on a sample of 530 firms that are listed in the United States and covers the period from 2015 to 2019. We contribute to the literature by incorporating ESG performance scores to measure CSR, and by investigating the moderating effect of CSR on the conservatism-investment efficiency relationship. Our results show that environmental and governance metrics positively influence investment efficiency, while social performance indicators have a negative association. Moreover, the environmental performance indicator strengthens the relationship between conservative accounting and investment efficiency, while the governance indicator weakens this association. Overall, our study provides new insights into the interplay between conservative accounting, investment efficiency, and CSR and sheds light on the importance of considering CSR in investment decision-making. [ABSTRACT FROM AUTHOR]