Search

This study provides new evidence on the influential role of external auditors in enhancing the informativeness of form 10-K annual reports to shareholders. Specifically, we find that the client's choice of a Big 4 auditor (PwC, EY, KPMG, and Deloitte) versus a non-Big 4 auditor contributes to cross-sectional variations in 10-K disclosure volume. We also document that the benefit of enhanced disclosures provided by Big 4 auditors is more pronounced for audit clients with poorer accrual quality and those with higher information asymmetry. Furthermore, we introduce the portion of 10-K length unexplained by operating complexity and observable client characteristics as a new proxy for audit firm effort. Specifically, we find that abnormally long disclosures are associated with higher audit fees and longer audit report lag, which implies that an incremental level of audit effort can be inferred from the discretionary component of 10-K disclosures. As audit effort is costly, a greater volume of 10-K disclosures can be expected to be associated with an improvement in the quality of financial reporting. Overall, our findings show that auditors play more than a simple attestation role in the financial reporting process, and that the quality of financial reporting in a company's 10-K annual report is a joint product of the effort and decisions of both a company's managers and its auditors. [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.)

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.)

BACKGROUND: Financial toxicity of bladder cancer care may influence how patients utilize healthcare resources, from emergency department (ED) encounters to office visits. We aim to examine whether greater household net worth (HHNW) confers differential access to healthcare resources after radical cystectomy (RC). METHODS: This population-based cohort study examined the association between HHNW and healthcare utilization costs in the 90 days post-RC in commercially insured patients with bladder cancer. Costs accrued from the index hospitalization to 90 days after including health plan costs (HPC) and out-of-pocket costs (OPC). Multivariable logistic regression models were generated by encounter (acute inpatient, ED, outpatient, and office visit). RESULTS: A total of 141,903 patients were identified with HHNW categories near evenly distributed. Acute inpatient encounters incurred the greatest HPC and OPC. Office visits conferred the lowest HPC while ED visits had the lowest OPC. Black patients harbored increased odds of an acute inpatient encounter (OR 1.22, 95% CI 1.16-1.29) and ED encounter (OR 1.20, 95% CI 1.14-1.27) while Asian (OR 0.76, 95% CI 0.69-0.85) and Hispanic (OR 0.74, 95% CI 0.69-0.78, p

We examine the effects of implementing a U.S. approach to the enforcement of mandatory disclosure in China. Using a hand-collected sample of comment letters (CLs) issued by the Shanghai Stock Exchange over the period of 2013 to 2018, we show that stock price reactions to CL receipts and replies are negative and significant. Using textual analysis to match issues raised by regulators to targeted firms' changes in disclosure, we show that these firms do address CL issues point by point, but do not experience significant improvements in their information environments. Our article highlights the importance of incentives rather than regulation/enforcement in reducing information asymmetry. [ABSTRACT FROM AUTHOR]

Previous literature on the engagement quality (EQ) review argues that EQ reviewers should provide more efforts into the review process when fieldwork auditors' judgments and conclusions on the financial statements are potentially biased. Little empirical study has been done, however, partly due to the confidentiality of the detailed data on EQ reviewers' audit hours. The purpose of the article is to shed light on the existing literature by conducting an empirical investigation using a unique actual data set available in Korea. The results show that the EQ review hours are positively associated with CEO turnovers, a proxy for the audit risk, which supports the prediction of the theory on the EQ review. Additional analyses show that such results are stronger under (a) the upward earnings management and (b) the forced CEO turnover. The article extends the existing literature on the EQ review process and enhances the understanding of the engagement-level quality control in the volatile audit environment by providing empirical evidence to the analytic discussions on the EQ review. [ABSTRACT FROM AUTHOR]

For many financial planners, cash-flow planning is financial planning. Planners must make the effort to fully understand a client's income. This may involve looking at W-2 forms, profit and loss statements, and K-1 tax forms from the client's business. In addition, the planner must identify all the expenses that the client has. We recommend several strategies for monitoring cash-flow planning. [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.)

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.)

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.)

Managers' incentives to round up reported earnings per share (EPS) cause an underrepresentation of the number 4 in the first post-decimal digit of EPS, or "quadrophobia." We develop a novel measure of aggressive financial reporting practices based on a firm's history of quadrophobia. Quadrophobia is pervasive, persistent, and successfully predicts future restatements, Securities and Exchange Commission enforcement actions, and class action litigation. It is more pronounced when executive compensation is more closely tied to the stock price and when the firm anticipates violating debt covenants. Quadrophobia is especially strong when rounding-up EPS allows firms to meet analyst expectations, and investors seem not to see through this behavior. [ABSTRACT FROM AUTHOR]

Taking advantage of the implementation of the 2003 European Commission (EC) directive on financial reporting, we explore the impact of mandatory financial disclosure on mergers and acquisitions (M&A). We find robust evidence that the number (and volume) of private firms becoming an M&A target increases with mandatory disclosure. Analyses of cross-industry differences, deal-level data, and post-deal performance indicate that financial disclosure increases M&A activity by reducing information frictions in the market for corporate control. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online [ABSTRACT FROM AUTHOR]

We investigate whether board-interlocked firms via an audit committee (AC) board member exhibit correlated non-audit service (NAS) purchases, and whether financial reporting quality and future firm performance vary with the amount of correlated NAS purchases from the AC interlock. We find that AC interlocked firms have positively correlated total NAS and three NAS subtypes—Tax, Assurance, and Other—in the overall sample period from 2000 to 2016, and in each of the subperiods pre- and post-SOX (Sarbanes–Oxley Act). Firms with a larger NAS component that is explained by the AC interlock tend to exhibit lower financial reporting quality. We also find evidence that firms with higher AC interlocked NAS purchases are associated with lower future performance, although this association exists only in the pre-SOX period. Overall, the evidence suggests that greater NAS purchases among AC interlocked firms can have a detrimental effect on financial reporting quality and auditor independence. While these detrimental effects are concentrated in the pre-SOX period when there were less restrictions on NAS purchases, we find some evidence that the association with lower financial reporting quality persists in the post-SOX period. [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]

Cryptocurrencies and blockchain technology are disruptive innovations at the vanguard of a new wave of the digital revolution. The far-reaching appeal, global reach, unprecedented mobility of capital, and multitude of trading venues have created a marketplace like no other. The economic fundamentals underlying this market are yet to be fully comprehended, as evidenced by the often-contradicting guidelines recommended by accounting firms, government agencies, and standard setters. Many of the definitions and models used for classical markets cannot be applied directly to cryptocurrency. Basic concepts must be reinterpreted, and models must be modified to fit the mechanics of these markets. In this article, we focus on one such concept: that of fair value. We argue that in light of the fragmentation of cryptocurrency markets and the global dispersion of trading venues, a principal market may be difficult to identify. The primary objective of this article is to present a methodology to dynamically designate principal markets and derive fair value prices for financial reporting using this designation. [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.)

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.)

We construct a new numerical measure of earnings announcement surprises, standardized unexpected earnings call text (SUE.txt), that does not explicitly incorporate the reported earnings value. SUE.txt generates a text-based post-earnings-announcement drift (PEAD.txt) larger than the classic PEAD. The magnitude of PEAD.txt is considerable even in recent years when the classic PEAD is close to 0. We explore our text-based empirical model to show that the calls' news content is about details behind the earnings number and the fundamentals of the firm. [ABSTRACT FROM AUTHOR]

We investigate whether firms limit the volume of financial items in annual reports (including the financial statements and footnotes) to obfuscate poor future firm performance, and how investors react to this reduced volume. We estimate abnormal volume to capture managers' discretion over reporting in the 10-K and find that abnormally low volume predicts poor future earnings. This relation is more pronounced in firms where the market has difficulty in detecting managerial intervention in the disclosure process. We also find that abnormally low volume predicts negative future returns, suggesting that managers benefit from disclosing fewer financial items by delaying the incorporation of bad news into stock prices. Further corroborating our results, we find that the volume is abnormally low when there exist strong managerial incentives to withhold bad news and manipulate investor perceptions upward. Overall, our evidence is consistent with the notion that managers attempt to obfuscate poor future performance and inflate current stock prices by disclosing fewer financial items in the 10-K. [ABSTRACT FROM AUTHOR]

Family business groups (FBGs) typically control several member firms and can hire a single auditor or multiple auditors to audit their member firms. This article examines what type of auditor appointment strategy constrains intragroup value transfers within FBGs. Analyzing related-party transactions (RPTs) within FBGs in Hong Kong, this study provides evidence that FBGs with multiple auditors undertake more intragroup value transfers than FBGs with a single auditor. However, the adverse effect of multiple-auditor appointments is mitigated by a stronger board and higher financial reporting comparability among member firms. Using an alternative measure of intragroup value transfers, we also find that the market perceives multiple-auditor appointments as impairing audit effectiveness. Overall, our findings offer the new insight that controlling families can exploit the appointment of multiple auditors as a "divide and conquer" strategy which undermines the monitoring role of auditors against intragroup value transfers, but stronger corporate governance of member firms can mitigate the adverse effect. [ABSTRACT FROM AUTHOR]

The study examines whether consolidating qualified special-purpose entities (QSPEs) under Statement of Financial Accounting Standards Nos. 166 and 167 (FAS 166/167) improves the market reaction to earnings disclosures. We use a difference-in-difference design to compare the change sample, which is defined as banks that consolidate QSPEs after FAS 166/167, with the no-effect sample, which is defined as financial institutions with no QSPEs or banks that do not consolidate QSPEs after FAS 166/167. The results show that, during a short window around earnings announcements, the change sample experiences higher market reaction to earnings surprises than the no-effect sample after the implementation of FAS 166/167. We also find that the effect is more pronounced in banks that engage in securitization and in financial institutions whose securitized loans originate primarily from consumer loans rather than mortgages. Additional analysis also finds that adopting FAS 166/167 enhances the ability of earnings to predict future earnings and future cash flows in banks. The important implication of the study for regulators is that FAS 166/167 improves bank transparency. [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.)

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 study examines whether the severity of a material internal control weakness disclosure impacts lending decisions. In addition, this study also investigates whether loan officers' tolerance for ambiguity affects lending decisions. An experiment was conducted with 68 U. S. loan officers, who provided risk assessments and lending probabilities for a hypothetical borrower. One independent variable, a material weakness in the borrower's internal controls, was manipulated using two levels--more severe versus less severe. The other independent variable, tolerance for ambiguity, was measured with a commonly used scale for this personality characteristic. Findings indicate that more severe material internal control weaknesses lead to higher risk assessments by lenders and lower probabilities of granting lines of credit. Also, lenders having a low tolerance for ambiguity provide higher risk assessments and lower probabilities of granting lines of credit than do lenders having a high tolerance for ambiguity. Keywords: internal controls, material weaknesses, tolerance for ambiguity, commercial lending, Previous research has found that commercial lending decisions are adversely impacted by borrowers' disclosures of material weaknesses in internal controls as compared to effective internal controls (Schneider and Church, 2008; [...]

Traditional defined benefit pension plans sponsored by state and local governments are dramatically underfunded, requiring large infusions of public funds in future years if they are to deliver promised benefits. [...]

Principles of Accounting I is a required course for all business majors in the College of Business at Bowie State University. The course had a high failure rate, which resulted in many students migrating to other majors in the university. This problem initiated a study to improve teaching and assessment techniques. A new teaching methodology was developed from a course redesign in an effort to reduce the failure rates. The redesign model requires students to complete graded pre-lecture reading assignments to ensure advanced preparation. The new model was implemented in all Fall 2018 sections, increasing students' enrollment in each section from 25 to 30. The changes reduced the need for many adjunct faculty, which is a cost-saving for the College of Business. Course enrollment steadily decreased from 2006 to 2015 but rebounded and increased consistently after fully implementing the redesign model in Fall 2018. Furthermore, DFW rates declined from 53% in Spring 2018 to 44% in Fall 2018, 42% in Spring 2019, 45% in Fall 2019, and 27% in Spring 2020. The course redesign data showed a steady decrease in DFW rates and a steady increase in enrollment over multiple semesters. Full-time faculty are teaching all course sections to ensure consistency and accountability with the course redesign, thus maintaining the positive trend., INTRODUCTION Universities have been faced with decreased enrollment and retention rates, challenges with timely graduation, and financial difficulties leading to a heightened appeal to attract, pass, retain, and graduate the [...]

In this article, we investigate the moderating role of ownership structure on the relationship between the quality of voluntary financial disclosure and share price volatility of non-financial companies listed on the Tunis Stock Exchange. The sample of 411 annual reports of non-financial companies listed on the Tunis Stock Exchange is studied and analyzed from 2010 to 2019. GLS method is used. Our findings demonstrate that the impact of voluntary disclosure quality on stock price volatility is statistically significantly negative after incorporating ownership structure as a moderate variable in our empirical model, and further that the positive influence of institutional ownership on stock price volatility is mitigated through its indirect link with voluntary disclosure quality. Our investigation contributes in several ways. We are studying the disclosure quality in a frontier market, in which investor confidence has been seriously impacted following the 2011 revolution. We focus in this respect on the Tunisian stock market, known for its culture of withholding information, as Tunisian companies do a low tendency to voluntarily disclose such information. Additionally, we contribute to the current research literature on voluntary disclosure through examining the moderating role of ownership structure on the relationship between voluntary disclosure and stock return volatility in a frontier market. Keywords: Voluntary disclosure quality, stock price volatility, signaling theory, moderating role of ownership structure, frontier market, Tunisian stock market. JEL Classification- D83, G12, G23, M41, G14, G30, INTRODUCTION The lack of transparency between companies and their different stakeholders, such as investors, is perceived as a major problem. This is why voluntary disclosure has emerged as an indispensable [...]

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.)

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.)

CECL—an accounting response to lessons learned from the 2008 to 2009 financial crisis—like most accounting standards, is not perfect. Imperfections are a direct result of tradeoffs embedded in major new standards issued by the Financial Accounting Standards Board. Tradeoffs arise from cost—benefit judgments made over many years by individual Board members—often holding diverse views about costs and what constitutes decision-useful information. This article contributes to the assessment of those judgments and perceived weaknesses in CECL so that future Boards can continue the iterative process of improving U.S. GAAP. Some stakeholders assert that there are weaknesses because they believe CECL (a) will change how banks are managed; (b) may reduce the lending products provided; (c) necessitates a need for banks to raise capital; (d) would create widespread confusion among investors; and (e) could reduce the availability of credit. Now that CECL is effective for of the entire banking industry, the author believes the Financial Accounting Standards Board (FASB) and public policy-makers will benefit from rigorous academic research to help understand whether CECL met its main objective of providing more decision-useful information about expected credit losses. To achieve this objective, CECL strived to better align measurement of the allowance for credit losses (a valuation account) with changes in credit risk and to require consideration of a broader range of information. This article explores the relevant accounting issues and early financial reporting results to pique the interest of academic researchers. [ABSTRACT FROM AUTHOR]

This article provides micro-level evidence for the role of foreign-invested enterprises (FIEs) in the cross-border transmission of global financial uncertainty shocks. Using Chinese firm-level data, we find that rising uncertainty has a significantly larger contractionary effect on real investment for FIEs than their local counterparts. This effect is more pronounced for firms faced with greater investment irreversibility or financial constraints. The contractionary effect is mainly driven by downside uncertainty, whereas upside uncertainty is modestly expansionary. Similar effects are found for other firm-level performances. There is also a spillover effect to local private firms with FIEs concentrated in downstream sectors. [ABSTRACT FROM AUTHOR]

We quantify the real implications of trade-offs between firm information disclosure and long-term investment efficiency. We estimate a dynamic equilibrium model in which firm managers confront realistic incentives to misreport earnings and distort their real investment choices. The model implies a socially optimal level of disclosure regulation that exceeds the estimated value. Counterfactual analysis reveals that eliminating earnings misreporting completely through disclosure regulation incentivizes managers to distort real investment. Lower earnings informativeness raises the cost of capital, which results in a 5.7 |$\%$| drop in average firm value, but more modest effects on social welfare and aggregate growth. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online. [ABSTRACT FROM AUTHOR]