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Safarnezhad, Boroujeni Amin, Ali Akbar Chaharmahali, Falak Jamshid Peik, and Mohammad Rabiei. "Examining the Practical Concepts of the Tone of Financial Reporting in Public Companies with an Emphasis on Text Mining." Public Accounting 19, no. 1 (2023): 105–18. https://doi.org/10.5281/zenodo.14044050.
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The primary goal of shareholders in a company is to increase stock returns. In this regard, quantitative and qualitative information about the company can assist investors in enhancing stock returns. Therefore, the aim of the present study is to examine the role of the tone of financial reporting in explaining the stock returns of public companies, with an emphasis on text mining. To empirically investigate this topic, a text analysis methodology was employed, utilizing data from 29 public companies listed on the Tehran Stock Exchange between 2013 and 2019. The identification of the tone present in the board of directors' reports was conducted using text mining methods in the R programming environment. To test the research hypotheses, a comparison of means between two populations was performed using Stata software. The results and findings of the study indicate that the tone of financial reporting is effective in explaining the differences in stock returns of public companies, and there is a statistically significant difference between the stock returns of public companies with positive and negative financial reporting tones. By employing text mining methods, one can analyze the tone of financial reporting of companies and select those with a high positive financial reporting tone to enhance stock returns. It is recommended that standard setters pay more attention to auditing the written information in financial reports, as the opportunistic use of tone by managers may not be audited, potentially reducing users' trust in the written messages of financial reports. The results and findings of this research can contribute to the development of text mining tools in the fields of accounting and finance.
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Safarnezhad, Boroujeni Amin, Ali Akbar Chaharmahali, Falak Jamshid Peik, and Mohammad Rabiei. "The Impact of Financial Reporting Tone on Stock Returns of Companies Listed on the Tehran Stock Exchange." Journal of Management Accounting and Auditing 12, no. 46 (2023): 429–40. https://doi.org/10.5281/zenodo.14044029.
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In recent years, analyzing various aspects of the qualitative information in financial reports has become an important tool for decision-making by investors and other stakeholders in the capital market. The aim of the present study is to examine the impact of the tone of financial reporting, as one of the key aspects of qualitative information in financial reports, on stock returns of companies. To empirically investigate this topic, the study employs a text analysis methodology and utilizes data from 90 companies listed on the Tehran Stock Exchange between 2013 and 2019. The statistical technique used to test the hypotheses is multivariate regression of panel data, employing the statistical software Stata. The measurement of the tone present in the financial reports was conducted based on a vocabulary culture in R software. The results indicate that the tone of financial reporting has a negative and significant impact on the stock returns of companies listed on the Tehran Stock Exchange. This research not only advances studies in the field of qualitative information but also deepens the existing knowledge in the emerging subfield of reporting tone.
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Rahman Kabrat, Ahmed ali, Mohsen Dastgir, and Saeid Aliahmadi. "The Effect of Corporate Governance Components and Corporate Strategy on The Tone and Readability of Financial Reporting." Business, Marketing, and Finance Open 1, no. 6 (2024): 114–31. https://doi.org/10.61838/bmfopen.1.6.10.
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The primary aim of this study was to model the factors influencing the tone and readability of financial reporting, focusing on corporate governance components and corporate strategies in the Tehran Stock Exchange. The research considered corporate governance components such as managerial ownership, institutional ownership, familial ownership, board size, board independence, gender diversity within the board, independence of the auditing committee, frequency of auditing committee meetings, and the size of the auditing committee. Additionally, corporate strategies, categorized as defensive and offensive strategies, were analyzed as independent variables. The dependent variables in this study were the tone and readability of financial reporting. The statistical sample comprised 125 companies from 2013 to 2022, with data analyzed using multiple regression tests. Findings from the first and second hypotheses revealed that institutional ownership, board independence, auditing committee independence, and the offensive strategy had a positive and significant effect on the tone of financial reporting. Conversely, managerial ownership, familial ownership, and the defensive strategy exhibited a negative and significant effect on the tone. Similarly, results from the third and fourth hypotheses showed that the number of auditing committee meetings, board independence, auditing committee independence, and the offensive strategy positively and significantly influenced financial reporting readability. In contrast, managerial ownership, familial ownership, and the defensive strategy negatively and significantly affected readability. The coefficients of determination indicated that corporate governance components and corporate strategies accounted for 62.7% of the variation in financial reporting tone and 74.3% of the variation in financial reporting readability, respectively.
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Rich, Kevin T., Brent L. Roberts, and Jean X. Zhang. "Linguistic Tone of Municipal Management Discussion and Analysis Disclosures and Future Financial Reporting Delays." Journal of Emerging Technologies in Accounting 13, no. 2 (2016): 93–107. http://dx.doi.org/10.2308/jeta-51618.
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ABSTRACT We investigate relations between the textual content of municipal Management Discussion and Analysis (MD&A) disclosures and future financial reporting. Specifically, we examine the linguistic tone of municipal MD&A disclosures and future financial reporting delays as a proxy for financial reporting quality. Using a sample of 362 municipal MD&A disclosures in fiscal year-end 2011, our empirical analysis suggests that the fraction of positive to total words in municipal MD&A disclosures is associated with timelier financial reporting in the following year after controlling for current report timing and other municipality and governance factors. We interpret our results to suggest that positive language in municipal MD&A disclosures is a signal of confidence in financial reporting quality, indicating that MD&A text contains relevant information in forecasting the quality of future financial reporting for local governments. JEL Classifications: G34; H55; H72.
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Patelli, Lorenzo, and Matteo Pedrini. "Is Tone at the Top Associated with Financial Reporting Aggressiveness?" Journal of Business Ethics 126, no. 1 (2013): 3–19. http://dx.doi.org/10.1007/s10551-013-1994-6.
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Pourkarim, Mohammad, Saeid Jabbarzadeh Kangarlouei, Jamal Bahri Sales, and Hassan Galavandi. "The Impact of Corporate Governance on Tone of Financial Reporting." Iranian journal of Value and Behavioral Accounting 4, no. 8 (2020): 33–62. http://dx.doi.org/10.29252/aapc.4.8.33.
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Abdollahi, Taher, Saeed Jabbarzadeh Kangharloui, Jamal Bahri Sales, and Asgar Pakmaram. "A Model for Determining Audit Fees with Emphasis on the Tone of Financial Reporting Based on Grounded Theory." International Journal of Innovation Management and Organizational Behavior 3, no. 5 (2023): 208–17. http://dx.doi.org/10.61838/kman.ijimob.3.5.24.
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Objective: The objective of this study is to develop a model for determining audit fees with an emphasis on the tone of financial reporting, using a grounded theory approach. Methodology: This research employs a qualitative methodology utilizing grounded theory based on the Strauss and Corbin approach. Data were collected through in-depth and semi-structured interviews with 12 participants, including auditors from firms, auditors from the Audit Organization, financial managers, and individuals with experience in contracting with auditors. The interviews were conducted between April and June 2021. Data analysis was performed using MAXQDA10 software, following open, axial, and selective coding procedures. Findings: The analysis identified 1,518 codes, leading to 38 subcategories and 14 main categories. The study found that client size, the complexity of operations, and the client's budget significantly influence audit fees. It also highlighted that the tone of financial reports serves as a significant intervening factor, moderating audit fees. Specifically, a positive tone in financial reports is associated with lower audit fees, while a negative tone leads to higher fees. The findings suggest that firms with higher reputations and industry specialization command higher fees due to their perceived reliability and expertise. Conclusion: The study concludes that audit fee determination is a multifaceted phenomenon influenced by various factors, including client characteristics, firm reputation, industry specialization, and the tone of financial reporting. The tone of annual reports plays a critical role as an intervening variable, moderating audit fees either positively or negatively. The findings underscore the importance of considering qualitative factors, such as report tone, alongside traditional quantitative factors in audit fee determination. The study also provides recommendations for policymakers, audit firms, and corporate managers to enhance the fairness and rationality of audit fee structures.
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Buchholz, Frerich, Reemda Jaeschke, Kerstin Lopatta, and Karen Maas. "The use of optimistic tone by narcissistic CEOs." Accounting, Auditing & Accountability Journal 31, no. 2 (2018): 531–62. http://dx.doi.org/10.1108/aaaj-11-2015-2292.
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Purpose The purpose of this paper is to examine how CEO narcissism can be related to the usage of an abnormal optimistic tone in financial disclosures. Drawing on upper echelons theory, this paper suggests a link between CEO characteristics, such as narcissism, and accounting choices, such as optimistic financial reporting language. Design/methodology/approach To measure the narcissistic trait of a CEO, the study builds on a model using a set of 15 archival indicators. The usage of an abnormal optimistic tone is assessed quantitatively when looking at firms’ 10-K filings, where “abnormal” refers to tone that is unrelated to a firm’s performance, risk, and complexity. This approach allows for the use of firm-fixed effects for a sample of US listed firms over the period 1992-2012. Findings The results show that CEO narcissism is significantly positively related to abnormal optimistic tone in 10-K filings. If a highly abnormal optimistic tone is present, the level of CEO narcissism is positively related to the likelihood of future seasoned equity offerings and larger future investments in research and development. Research limitations/implications The findings are relevant for shareholders and stakeholders as well as auditors and legislators. All stakeholders should be aware of the overly optimistic reporting language resulting from CEO narcissism and need to make allowances for it when assessing firm performance based on financial disclosures. Originality/value This study is the first to show in a large-scale sample how CEO narcissism can be related to a firm’s use of optimistic language, and thus contributes to the question of how personality traits affect an organization’s financial reporting strategy.
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Biloblovskyi, Sviatoslav, Oksana Haidaienko, Larysa Khrystenko, Olena Demchuk, and Hanna Morozova. "Integrated reporting management: Optimising organisational performance." Multidisciplinary Reviews 7 (June 11, 2024): 2024spe016. http://dx.doi.org/10.31893/multirev.2024spe016.
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This study examines the intricate interdependence of organisational management control systems (MCS), sustainability integration, and financial reporting. Empirical analysis highlights the need for a holistic and multi-faceted integration of internal systems, particularly across management accounting, financial reporting, and sustainability. The research outlines the challenges and benefits of embedding sustainability principles into management systems, demonstrating potential gains in efficiency, risk mitigation, and competitive advantage. One of the critical conclusions that emerged based on the conducted study is related to the perception of Managerial Discretion. Acknowledging the invariance of top management roles and behaviours is crucial when designing reporting systems. Tailoring the system to the specific environmental conditions the organisation faces is essential, striving for a balance between maximising opportunities and maintaining control. Comprehensive integration between management accounting, financial reporting, and sustainability systems addresses concerns about the disparity in sophistication between financial and sustainability performance indicators. A one-size-fits-all approach is impractical, necessitating a distinct project approach for each organisation when implementing the reporting management function. It is suggested that organisations should be diversified according to their size and maturity level in order to identify specific and concrete measures aimed at building an effective reporting system. The author enhanced the critical role of top management in defining, designing, and implementing a practical reporting governance framework. This framework should ensure alignment with the organisation's strategic objectives and needs. A successful organisational structure hinges on establishing and maintaining the "tone at the top". By promoting a positive "tone at the top," management fosters a sustainable and successful corporate culture, paving the way for future development and achieving strategic goals. These conclusions offer valuable insights for organisations seeking to establish robust and effective reporting systems that support informed decision-making, stakeholder engagement, and sustainable value creation.
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Beretta, Valentina, Maria Chiara Demartini, Laura Lico, and Sara Trucco. "A Tone Analysis of the Non-Financial Disclosure in the Automotive Industry." Sustainability 13, no. 4 (2021): 2132. http://dx.doi.org/10.3390/su13042132.
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This study’s purpose is twofold. On the one hand, it analyzes the relationship between the profitability of firms and the tone of nonfinancial disclosures; on the other hand, it tests the relationship between the environmental, social, and governing (ESG) performance of firms and the tone of nonfinancial disclosures on the automotive sector under two different and competing approaches, which are incremental information and impression management. The sample is composed of 68 nonfinancial reports issued by 17 automotive organizations between the years 2016 and 2020. Data analysis proceeded in two stages. First, a content analysis was performed to assess the linguistic attributes of the nonfinancial disclosure. Second, an inferential regression analysis was performed to test the hypothesized associations between firms’ performance and tone of their disclosures. The results of this study are aimed at providing evidence of the determinants of the verbal tone in the corporate nonfinancial reporting in a specific industry.
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Nikbakht, Mohammad Reza, Soraya Weysihesar, and Mohammad Pourkarim. "The Relationship between the Readability of Financial Reporting and the Company's Cost of Capital: The Moderating Role of Financial Reporting Tone." journal of Value & Behavioral Accounting 8, no. 16 (2024): 185–208. http://dx.doi.org/10.61186/aapc.8.16.185.
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Mobus, Janet Luft. "Developing Collective Intentionality and Writing the Rules of the Game for Environmental Reporting: A Content Analysis of SOP 96-1 Comment Letters." Accounting and the Public Interest 11, no. 1 (2011): 68–95. http://dx.doi.org/10.2308/apin-10123.
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ABSTRACT Financial reporting operates in a changing social landscape. One focus of change in the contemporary social landscape is growing recognition of the impact of human activity on the natural environment, a significant part of which derives from economic activity. Evidence exists that financial statement users want environmental accounting information, yet it remains underdeveloped. This underdevelopment becomes notable because it is increasingly clear that long-term economic viability is wholly dependent on ecological sustainability. This study furthers our understanding of financial reporting, accounting standards, and the standard-setting process as institutional practices in the U.S. by exploring whether voices raising these emerging concerns find receptivity in accounting standards setting. Searle's (1995, 1998) work on constructing institutional reality provides the theoretical frame. Results add a layer of empirical analysis to prior accounting research using this frame to critique the openness of discourse in developing financial reporting. The American Institute of Certified Public Accountants (AICPA) received 77 comment letters in consideration of SOP 96-1, “Environmental Remediation Liabilities.” These letters are evaluated for rhetorical tone using quantitative content analysis. Sixteen letters take issue with the narrow scope of the proposed treatment of environmental reporting. These 16 are further analyzed using qualitative content analysis. Comparing rhetorical tone and meaning content of the comment letters reveals active discussion of important environmental reporting issues that go beyond the narrow technical standard adopted. Data Availability: Data used in this study are available by contacting the author.
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Rich, Kevin T., Brent L. Roberts, and Jean X. Zhang. "Linguistic Tone and Internal Control Reporting: Evidence from Municipal Management Discussion and Analysis Disclosures." Journal of Governmental & Nonprofit Accounting 7, no. 1 (2018): 24–54. http://dx.doi.org/10.2308/ogna-52326.
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ABSTRACT We study the textual content of MD&A disclosures. Specifically, we model the determinants of linguistic tone (based on the fraction of positive or negative words) in municipal MD&A sections and test for associations with the reporting of future internal control weaknesses. Our evidence suggests that factors such as high unemployment, general fund deficits, and less funding from higher levels of government are associated with negative tone, based on a sample of 362 MD&A disclosures in fiscal year 2011. Our internal control analysis is consistent with positive (negative) tone in municipal MD&A disclosures being associated with fewer (more) subsequent-year internal control weaknesses after controlling for other governance, demographic, and performance factors. Our analysis also suggests that positive tone is associated with a lower probability of future general fund deficits. Our findings suggest that municipal MD&A content contains important information regarding the quality of future municipal financial reporting through internal control quality. JEL Classifications: H83.
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Aly, Doaa, Sherif El-Halaby, and Khaled Hussainey. "Tone disclosure and financial performance: evidence from Egypt." Accounting Research Journal 31, no. 1 (2018): 63–74. http://dx.doi.org/10.1108/arj-09-2016-0123.
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Purpose This paper aims to examine the extent to which financial performance (FP) represents one of the main determinants for tone disclosure (TD) in Egyptian annual reports. The authors also measure the bidirectional relationship between TD and FP. Design/methodology/approach The manual content analysis is used to measure the levels of TD in annual reports for a sample of 105 firms listed on the Egyptian stock market. The sample covers a three-year period (2011-2013). Findings The descriptive analysis in this paper shows that Egyptian firms disclose more good news than bad news. Therefore, the net news disclosure, or net variances, between good/bad is positive. The empirical analysis shows a positive association between the narrative disclosure of good/bad news and FP based on return on assets. The authors also find a highly significant association between the auditor, profitability, leverage, firm growth and financial reporting of good/bad news information. Finally, the results of the ordinary least squares regression show that the causality between the two endogenous variables runs from FP to TD. Thus, TD is determined by FP. Originality/value This study offers a novel contribution to disclosure studies by being the first study to examine TD in one of the developing countries.
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Shields, Karin, Iain Clacher, and Qi Zhang. "Negative Tone in Lobbying the International Accounting Standards Board." International Journal of Accounting 54, no. 03 (2019): 1950010. http://dx.doi.org/10.1142/s1094406019500100.
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With the aid of computerized sentiment analysis, this paper analyzes the role of constituents’ comment letters in the process of setting international financial reporting standards for financial instruments. Whilst explicit agreement in comment letters is associated with the board’s decision to proceed with its proposed course of action, we find no consistent evidence that explicitly stated disagreement has an impact on the resulting accounting standard. Using context-specific dictionaries, we find that increased levels of negative tone in comment letters increase the probability of the board subsequently abandoning a proposed course of action. Capturing dissent through negative tone facilitates large-scale analysis, and we show that the financial industry has been less successful than other constituents in its lobbying efforts through comment letters.
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Marais, Alastair. "Audit Quality and Financial Statement Manipulation: The Moderating Effect of Tone at the Top." International Journal of Economics and Financial Issues 14, no. 5 (2024): 220–32. http://dx.doi.org/10.32479/ijefi.16409.
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South Africa has recently fallen victim to numerous major corporate frauds. This has called into question South Africa’s audit quality, as indicated by its loss of the number one place for auditing and reporting standard strength, according to the World Economic Forum. This study examined the moderating effect of tone at the top on the relationship between audit quality and financial statement manipulation. Using a South African sample of 829 firm-year observations from 2011 until 2018, principal component analysis was used to construct two audit quality variables (competence and independence) and two tone at the top variables (autocratic and pragmatic). Financial statement manipulation was measured using fraud and discretionary accruals. The findings revealed that while an autocratic tone strengthened the negative relationship between audit quality and fraud, it also resulted in higher income-increasing discretionary accruals. This study contributes to the audit quality literature in South Africa by revealing how the tone at the top can affect the auditor’s ability to conduct a quality audit. The results will interest auditors and shareholders seeking to reduce fraud and earnings management.
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Beretta, Valentina, Chiara Demartini, and Sara Trucco. "Does environmental, social and governance performance influence intellectual capital disclosure tone in integrated reporting?" Journal of Intellectual Capital 20, no. 1 (2019): 100–124. http://dx.doi.org/10.1108/jic-02-2018-0049.
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Purpose The integrated reporting framework seeks to connect a firm’s financial and non-financial performance in a single report by displaying how different forms of capital contribute to the firm’s value creation. Drawing on impression management and incremental information approaches, the purpose of this paper is to examine how the content and semantic properties of intellectual capital disclosure (ICD) found in integrated reports is associated with firms’ performance. Design/methodology/approach All reports by European listed firms from 2011 to 2016 available via the integrated reporting emerging practice examples database are analysed. Content analysis is used to assesses the quality of ICDs, whereas a regression analysis tests the variation in semantic properties of ICDs according to firms’ performance. Findings ICDs in integrated reports are mainly discursive, with a backward looking orientation and a limited focus on human capital. On average, more than half of each ICD is conveyed in a positive tone. As the optimistic tone in firms’ ICDs increases, so too does their non-financial performance measured in terms of environmental, social and governance aspects. This finding supports the incremental information approach. Originality/value This paper contributes to the current literature on ICDs by introducing new evidence on firms’ motivations for non-financial disclosures in integrated reports. By taking a more comprehensive theoretical approach, namely, testing both impression management and incremental information hypotheses, this research extends on prior studies which tested similar relationships in integrated reports but focussed only on the impression management hypothesis.
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Roman, Aureliana-Geta, Mihaela Mocanu, and Răzvan Hoinaru. "Disclosure Style and Its Determinants in Integrated Reports." Sustainability 11, no. 7 (2019): 1960. http://dx.doi.org/10.3390/su11071960.
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Integrated Reporting promotes a more cohesive and efficient approach to corporate reporting and aims to improve the quality of information available to providers of financial capital. The purpose of this paper was to investigate the determinants of readability and optimism which build the disclosure style of integrated reports. Our research draws on impression management theory and legitimacy theory, while also taking into consideration the cultural system of Hofstede with its further developments by Gray. Our sample consisted of 30 annual reports, extracted randomly from the Integrated Reporting examples database set up by the International Integrated Reporting Council. For the purposes of our investigation, we have carried out a multivariate regression analysis. Firstly, our results show that the higher the revenues of the reporting company, the more balanced their integrated reports, while younger companies use a more optimistic tone when reporting. Additionally, optimism seems to be inversely correlated with the length of the reports. Secondly, entities based in countries with a stronger tendency towards transparency surprisingly provide less readable integrated reports. It was also revealed that companies operating in non-environmentally sensitive industries, as well as International Financial Reporting Standards adopters deliver foggier and thus less readable integrated reports.
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Melloni, Gaia. "Intellectual capital disclosure in integrated reporting: an impression management analysis." Journal of Intellectual Capital 16, no. 3 (2015): 661–80. http://dx.doi.org/10.1108/jic-11-2014-0121.
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Purpose – Intellectual capital (IC) is fundamental to understanding how firms create value; however, current IC disclosure (ICD) has been described as inadequate due to the lack of an established IC framework and companies’ actual commitment to report IC information. The International Integrated Reporting Council aims to foster ICD by means of integrated reporting (IR); such a report should display how IC and other forms of capital (e.g. financial) contribute to value creation over time. Drawing on impression management (IM) studies, the purpose of this paper is to assess the quality of ICD offered in IR. Design/methodology/approach – A manual content analysis of all the reports available in the International Integrated Reporting Council web site is run considering both the content of ICD and specific linguistic attributes (evidence, time orientation and tone). In addition, the study tests the relationship between the positive ICD tone and specific characteristics that may incentive managers to manipulate their disclosure to determine whether firms use ICD to manage public perceptions of corporate behaviour. Findings – The results of the content analysis show that majority of ICD is focused on relational capital, with limited quantitative and forward-looking information. Additionally, compared to non-ICD, ICD is significantly more optimistic. Furthermore, the positive tone of ICD is significantly associated with declining performance, bigger size and higher level of intangibles supporting the use of ICD as an IM strategy. Originality/value – The research contributes to the literature offering evidence of the quality of the ICD offered in the IR and demonstrating that ICD offered in the IR is used by managers opportunistically to advance their image.
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Faccia, Alessio, Julie McDonald, and Babu George. "NLP Sentiment Analysis and Accounting Transparency: A New Era of Financial Record Keeping." Computers 13, no. 1 (2023): 5. http://dx.doi.org/10.3390/computers13010005.
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Transparency in financial reporting is crucial for maintaining trust in financial markets, yet fraudulent financial statements remain challenging to detect and prevent. This study introduces a novel approach to detecting financial statement fraud by applying sentiment analysis to analyse the textual data within financial reports. This research aims to identify patterns and anomalies that might indicate fraudulent activities by examining the language and sentiment expressed across multiple fiscal years. The study focuses on three companies known for financial statement fraud: Wirecard, Tesco, and Under Armour. Utilising Natural Language Processing (NLP) techniques, the research analyses polarity (positive or negative sentiment) and subjectivity (degree of personal opinion) within the financial statements, revealing intriguing patterns. Wirecard showed a consistent tone with a slight decrease in 2018, Tesco exhibited marked changes in the fraud year, and Under Armour presented subtler shifts during the fraud years. While the findings present promising trends, the study emphasises that sentiment analysis alone cannot definitively detect financial statement fraud. It provides insights into the tone and mood of the text but cannot reveal intentional deception or financial discrepancies. The results serve as supplementary information, enriching traditional financial analysis methods. This research contributes to the field by exploring the potential of sentiment analysis in financial fraud detection, offering a unique perspective that complements quantitative methods. It opens new avenues for investigation and underscores the need for an integrated, multidimensional approach to fraud detection.
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Rajabalizadeh, Javad. "CEO overconfidence and financial reporting complexity: evidence from textual analysis." Management Decision 61, no. 13 (2023): 356–85. http://dx.doi.org/10.1108/md-06-2023-1033.
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PurposeThis study investigates the relationship between the Chief Executive Officer's (CEO) overconfidence and financial reporting complexity in Iran, a context characterized by weak corporate governance and heightened managerial discretion.Design/methodology/approachThe sample consists of 1,445 firm-year observations from 2010 to 2021. CEO overconfidence (CEOOC) is evaluated using an investment-based index, specifically capital expenditures. Financial reporting complexity (Complexity) is measured through textual features, particularly three readability measures (Fog, SMOG and ARI) extracted from annual financial statements. The ordinary least squares (OLS) regression is employed to test the research hypothesis.FindingsResults suggest that CEOOC is positively related to Complexity, leading to reduced readability. Additionally, robustness analyses demonstrate that the relationship between CEOOC and Complexity is more distinct and significant for firms with lower profitability than those with higher profitability. This implies that overconfident CEOs in underperforming firms tend to increase complexity. Also, firms with better financial performance present a more positive tone in their annual financial statements, reflecting their superior performance. The findings remain robust to alternative measures of CEOOC and Complexity and are consistent after accounting for endogeneity issues using firm fixed-effects, propensity score matching (PSM), entropy balancing approach and instrumental variables method.Research limitations/implicationsThis study adds to the literature by delving into the effect of CEOs' overconfidence on financial reporting complexity, a facet not thoroughly investigated in prior studies. The paper pioneers the use of textual analysis techniques on Persian texts, marking a unique approach in financial reporting and a first for the Persian language. However, due to the inherent challenges of text mining and feature extraction, the results should be approached with caution.Practical implicationsThe insights from this study can guide investors in understanding the potential repercussions of CEOOC on financial reporting complexity. This will assist them in making informed investment decisions and monitoring the financial reporting practices of their invested companies. Policymakers and regulators can also reference this research when formulating policies to enhance financial reporting quality and ensure capital market transparency. The innovative application of textual analysis in this study might spur further research in other languages and contexts.Originality/valueThis research stands as the inaugural study to explore the relationship between CEOs' overconfidence and financial reporting complexity in both developed and developing capital markets. It thereby broadens the extant literature to include diverse capital market environments.
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Saxton, Gregory D. "Discussant Comment on “Is Tone at the Top Associated with Financial Reporting Aggressiveness?” by Lorenzo Patelli, Matteo Pedrini." Journal of Business Ethics 126, no. 1 (2014): 21–24. http://dx.doi.org/10.1007/s10551-013-2040-4.
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Morris, Richard D., Sidney J. Gray, Joanne Pickering, and Sally Aisbitt. "Preparers' Perceptions of the Costs and Benefits of IFRS: Evidence from Australia's Implementation Experience." Accounting Horizons 28, no. 1 (2013): 143–73. http://dx.doi.org/10.2308/acch-50609.
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SYNOPSIS The costs and benefits of implementing International Financial Reporting Standards (IFRS) in practice can now be examined as more countries adopt IFRS. Our survey-based study provides unique insights into the perceptions of the preparers of 305 Australian company financial reports, when companies were preparing Australian equivalents to IFRS financial statements for the first time. We analyze preparers' perceptions of the costs of the implementation process and the likely benefits arising for their companies. Our results reveal a very negative tone among respondents reflecting concerns about the problems of IFRS implementation and the low level of expected benefits. We show that the primary sources of these concerns about IFRS were the difficulties associated with specific accounting issues, the ongoing monetary costs involved, and the perceived limited capital market impact of the changes introduced. Data Availability: Data used in the study are available from the authors upon request.
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Yan, Beibei, Özgür Arslan-Ayaydin, James Thewissen, and Wouter Torsin. "Does managerial ability affect disclosure? Evidence from earnings press releases." Asian Review of Accounting 29, no. 2 (2021): 192–226. http://dx.doi.org/10.1108/ara-03-2020-0036.
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PurposePrior research shows that managers with lower ability release less accurate management earnings forecasts and have more earnings restatements, lower earnings persistence and lower quality accruals estimations. Yet, whether the impact of managerial ability (MA) on financial reporting can be extended to the narrative section of firms' financial disclosures needs to be theoretically and empirically examined. The authors theorize in this paper that managers with low ability opportunistically inflate the tone to increase outsiders' perceptions of their ability. The authors also examine the relation between MA and the informativeness of tone to predict future firm performance and explain investors' reaction at earnings announcement.Design/methodology/approachThe authors collect 24,000 earnings press releases of 1,149 distinct firms between 2004 and 2013. Content analysis is used to proxy the tone of the disclosures. The authors use the score developed by Demerjian et al. (2012) to measure MA. The authors then employ panel data regressions to examine the impact of MA on disclosure tone.FindingsThe authors find that low-ability managers inflate the disclosure tone to positively influence labor market's perceptions about their ability. This effect is magnified for younger and shorter-tenured managers, for firms with more intense monitoring and during bear markets. The authors also find that the tone of earnings press releases of low-ability managers results in a lower stock price reaction. Supplementary analyses show that the results do not only hold for the tone, but also can be extended to other linguistic features such as the numerical intensity and the readability of earnings press releases. The results are robust to alternative library specifications and other corporate disclosures such as CEO letters to shareholders or 10-K filings.Research limitations/implicationsThe paper shows that managers worry about how firm performance influences the labor market assessment of their ability. In particular, the authors find that managers of low ability are willing to opportunistically manipulate the content of corporate disclosures to improve this perception and build their reputation.Originality/valueThe authors contribute by providing theoretical and empirical evidence on how managers attempt to steer assessments of their ability by manipulating corporate disclosures. Consistent with prior business research suggesting that one's ability is a key feature that affects managers' propensity to engage in ethical practices, such as tax avoidance or manipulation of financial information, this study shows that less able managers tend to inflate the tone of the earnings announcements and that this ability-driven bias is likely to be magnified by career concerns.
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Marshall, Leisa L., and James Cali. "They Protect Us from Computer Fraud: Who Protects Us from Them? SafeNet, Inc.: A Case of Fraudulent Financial Reporting." Issues in Accounting Education 30, no. 4 (2015): 353–72. http://dx.doi.org/10.2308/iace-51120.
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ABSTRACT This case focuses on fraudulent financial reporting as related to the tone at the top, primarily the chief operating officer, Carole Argo, of SafeNet, Inc. (SafeNet). This case provides students a real-world example by which to apply basic fraud concepts including the fraud triangle, fraud prevention, and red flags (fraud symptoms). Students analyze SafeNet to identify deficiencies and prevention methods, from the perspective of COSO's (2013) Internal Control—Integrated Framework's internal control objectives, components, and principles. Students also analyze SafeNet's corporate governance structure by comparing SafeNet's Board of Directors and its subcommittees pre- and post-SOX. Students learn of stock options as a form of compensation. However, this case does not focus on the details of accounting for stock options. This case is appropriate for students with the financial accounting principles course background. This case was classroom tested in a basic fraud examination course and an internal auditing course. Students' responses in both courses support the use of the case as a learning tool.
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Serrasqueiro, Rogério Marques, and Tânia Sofia Mineiro. "Corporate risk reporting: Analysis of risk disclosures in the interim reports of public Portuguese non-financial companies." Contaduría y Administración 63, no. 2 (2018): 34. http://dx.doi.org/10.22201/fca.24488410e.2018.1615.
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<p class="Default">Fast changing environments, globalization, coupled with financial scandals, and the advance of information technologies made corporate risk a very central issue in management and accounting. Current governance codes require that management disclose in annual reports its responsibility for the adequacy of risk management and internal control systems and the disclosure of risk and uncertainties faced by companies are required by both governance codes and corporate reporting. This study seeks to capture risk disclosure patterns adopted by public Portuguese companies in interim reports and to investigate whether the audit quality may explain the observed risk disclosures practices. Manual content analysis has been carried out in the interim reports of 35 non-financial Portuguese firms ranked by decreasing market capitalization to create indexes of corporate risk disclosure, which have been used for observing the tone of disclosure and for testing an explanatory model with proxies of audit quality together with other explanatory variables widely used in disclosure research. Results point out that quantified risk disclosure prevails in interim reports and that firm’s risk disclosure policies are not influenced by auditor’s quality. This work contributes to academic and regulatory environments, filling the gap about risk disclosure in the interim report, identifying the nature of corporate risk disclosures, assessing the quality of risk information and updating research about determinants of risk disclosure in interim reports.</p>
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Huang, Jie, Derek D. Wang, and Yiying Wang. "Textual Attributes of Corporate Sustainability Reports and ESG Ratings." Sustainability 16, no. 21 (2024): 9270. http://dx.doi.org/10.3390/su16219270.
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While the textual attributes of corporate financial documents, such as annual reports, have been extensively analyzed in the academic literature, those of corporate sustainability reports, which serve as a critical channel for nonfinancial disclosure, are relatively under-explored. Given the increasing importance of Environmental, Social, and Governance (ESG) factors in corporate strategy and stakeholder evaluation, understanding the role of textual attributes in sustainability reporting is crucial. This study examines 10,021 hand-collected sustainability reports from Chinese firms between 2009 and 2021, focusing on six key textual attributes: length, readability, tone, boilerplate language, redundancy, and completeness. Using computational linguistics, we analyze how these attributes evolve over time and their impact on ESG ratings provided by both international (MSCI, FTSE) and domestic (SNSI) agencies. Our findings reveal that the length and completeness of sustainability reports significantly influence ESG scores across agencies, demonstrating a shared appreciation for detailed and transparent disclosures. However, international and domestic rating agencies exhibit differing responses to attributes like tone, boilerplate language, and redundancy. These differences highlight variations in evaluation standards, methodologies, and value orientations between global and local stakeholders. The results emphasize the need for firms to tailor their sustainability disclosures to meet diverse stakeholder expectations. This study contributes to the growing body of literature on nonfinancial reporting by providing empirical evidence on how specific textual characteristics of sustainability reports can shape ESG evaluations, offering insights for both corporate communicators and policymakers.
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Pinello, Arianna S., Ara G. Volkan, Justin Franklin, Michael Levatino, and Kimberlee Tiernan. "The PCAOB Audit Quality Indicator Framework Project: Feedback From Stakeholders." Journal of Business & Economics Research (JBER) 16, no. 1 (2019): 1–8. http://dx.doi.org/10.19030/jber.v16i1.10280.
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Audit Quality Indicators (AQIs), as defined by the Center for Audit Quality, include four different elements:firm leadership and tone at the top; engagement team knowledge, experience, and workload; monitoring; and auditor reporting. AQIs are quantitative and qualitative measures designed to improve audit quality and help audit committees select the best audit firm for their current needs. They are intended to increase the reliability and accuracy of financial reporting. The Public Company Accounting Oversight Board (PCAOB) has issued a concept release proposing twenty-eight potential AQIs for use in the United States. The PCAOB release describes the AQI reporting framework and asks for public opinion on whether or not it should be implemented. This study reviews the comment letters in response to PCAOB Docket 041,Concept Release on Audit Quality Indicators, and the AQI reporting frameworks currently in place in the United Kingdom, Singapore, and other countries. After reviewing the PCAOB’s proposed AQI framework, response letters to Docket 041, and the AQI frameworks used in other countries, this paper provides an opinion on how the PCAOB should proceed with the AQI framework initiative in the U.S. The analysis suggests that AQI reporting should not be mandated in the U.S., but should become a flexible and voluntary framework that provides valuable information, enhances transparency in the audit profession, and establishes a commitment to the improvement of audit quality.
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Hermanson, Dana R., Jason L. Smith, and Nathaniel M. Stephens. "How Effective are Organizations' Internal Controls? Insights into Specific Internal Control Elements." Current Issues in Auditing 6, no. 1 (2012): A31—A50. http://dx.doi.org/10.2308/ciia-50146.
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SUMMARY Based on survey responses from approximately 500 Chief Audit Executives (CAEs) and other internal auditors, this article provides an insider's view of the perceived strength of organizations' internal controls (i.e., internal control over financial reporting) in the Control Environment, Risk Assessment, and Monitoring components of the Committee of Sponsoring Organizations' (COSO 1992a) Internal Control—Integrated Framework. Although the respondents largely rate control strength as relatively high, we identify several areas for potential improvement of internal controls, especially related to assessing the “tone at the top,” as well as following up on deviations from policy and management override of controls. In analyzing individual control elements, we find that public companies' controls are consistently rated as more effective than those of other organizations. We also find a number of interesting differences across key industries, especially in the Monitoring component, where banks and other financial services firms appear to have more robust Monitoring controls than do healthcare and other services firms. The component-level analysis reveals that internal control component strength is positively related to the CAE reporting primarily to the audit committee, public company status, and the average tenure of the internal audit function staff, among other findings. Based on the survey findings, we describe key implications relevant to internal and external auditors, accounting researchers and educators, and management.
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Kim, Jeong-Bon, Xiaoxi Li, Yan Luo, and Kemin Wang. "Foreign Investors, External Monitoring, and Stock Price Crash Risk." Journal of Accounting, Auditing & Finance 35, no. 4 (2019): 829–53. http://dx.doi.org/10.1177/0148558x19843358.
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We investigate whether foreign investors help to reduce local firms’ future stock price crash risk through their external monitoring. We find that the entrance of foreign investors is associated with a significant reduction in local firms’ future crash risk. Further investigation reveals that foreign investors help to improve local firms’ financial reporting quality from the perspectives of accrual quality, conservatism, and annual report tone management. The evidence is consistent with our conjecture that foreign investors play an important external monitoring role, which reduces managerial bad-news hoarding and thereby lowers local firms’ future crash risk. We also find that the crash risk–reducing role of foreign investors is more pronounced when foreign investors are more familiar with the institutional background of the host country, when they have stronger incentives to monitor local firms, and when local firms have higher governance efficacy. A variety of robustness checks reveals that our results are unlikely to be driven by potential endogeneity.
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Phesa, Masibulele, Mabutho Sibanda, Frank Ranganai Matenda, and Zamanguni Gumede. "Impression Management Tactics in the Chairperson’s Statement: A Systematic Literature Review and Avenues for Future Research." Journal of Risk and Financial Management 18, no. 5 (2025): 270. https://doi.org/10.3390/jrfm18050270.
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The chairperson’s statement (CS) has evolved into a key component of corporate reporting, offering an authoritative, high-level summary of a company’s activities, initiatives, operations, financial performance, and achievements over the preceding financial year, along with insights into future outlooks. Recognised for its informative value, the CS is consistently ranked by stakeholders as the most read and most influential section of the integrated report. Despite its importance, the CS is also a platform where corporate management often engages in impression management (IM) to portray a biased and overly positive image of the company. This study conducted a systematic literature review to examine the IM tactics employed within the CS. Based on the findings, an integrative conceptual framework was developed. Identified IM tactics include readability, textual characteristics, the influence of culture, legal systems and capital markets, paratext and intertextuality, the tone of language, forward-looking statements, retrospective sense-making, ambiguous language, the use of photographs and graphs, impersonalisation and evaluative language, and self-serving attributions. The results highlight that the study of IM strategies in CSs represents a rich and relevant research domain that warrants deeper exploration. Given its qualitative complexity and underexplored dimensions, this area offers several promising avenues for future investigation.
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Rahayu, Siti Puji, Ruhul Fitrios, and Sem Paulus. "PENGARUH KOMPETENSI SUMBER DAYA MANUSIA, TEKANAN EKSTERNAL, KOMITMEN ORGANISASI, DAN SISTEM PENGENDALIAN INTERN TERHADAP PENERAPAN TRANSPARANSI PELAPORAN KEUANGAN PEMERINTAH DAERAH (Studi Empiris Pada Organisasi Perangkat Daerah Kabupaten Rokan Hilir)." Jurnal Akuntansi dan Keuangan 8, no. 2 (2020): 69. http://dx.doi.org/10.29103/jak.v8i2.2693.
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Abstract: The main objective of this study is to examine the competence of human resources, external pressures, organizational commitment, and internal control systems in the implementation of financial verification in OPD Rokan Hilir using data analysis methods using Structural Equation Modelling-Partial Least Square (SEM-PLS) by using Warp-PLS version 5.0. The populationin this study are all Regional Apparaturs Organization(OPD) kabupaten Rokan Hilir. Sample selection used the slovin method as a measuring tool for calculating sample sizes. Respondent in this study are head of offices, employees in the section/unit that manages finance using the application of financial reporting transparency in 40 OPDs in the goverment kabupaten rokan hilir. So the total number of questionnaires tobe distributed is 120. The results of this study indicate that Human Resource Competency, External Pressure, Organizational Commitment, and Internal Control Systems have a positive effect on the Implementation of Transparency in Regional Government Financial Reporting
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Melati, Indah, Ramesh Nair, Roshayani Arshad, Farah Aida Ahmad Nadzri, and Ancella Anitawati Hermawan. "An Examination of the Quality of Web Disclosure Practices Through an Analysis of Firm Characteristics, Semantic Properties and Tone." Asia-Pacific Management Accounting Journal 17, no. 1 (2022): 153–86. http://dx.doi.org/10.24191/apmaj.v17i1-06.
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This research aimed to measure the quality of voluntary web-disclosure by listed companies in Indonesia, using a voluntary web-disclosure index to capture both quality and quantity of web-disclosures. Focussing on the dimensions of web-content and the presentation of information, this study scored 44 web-disclosure items using a dichotomous score to examine the variety of information and an ordinal score to examine the depth of the disclosure. The findings revealed that on average, the quality of voluntary web-disclosure in Indonesia is relatively low. Disclosure appeared heavily centred on financial information, with information on corporate governance and corporate social responsibility being only moderately disclosed. The differences of firm size and industry type among sample companies were found to be significantly positive when matched to the web-disclosure index. This confirms postulations of the Agency Theory and Signalling Theory which suggest that companies were motivated to signal accountability and transparency through their websites. This study extends prior research on web-disclosure by demonstrating that the use of semantic properties contributes to the richness of examining voluntary web-disclosure as it offers greater insights into the transparent reporting practices by corporate entities. Keywords: agency theory, signalling theory, voluntary web-disclosure, semantic properties, firm characteristics
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Whitley, Rob, and Anne-Marie Saucier. "An analysis of media coverage of the transition from military to civilian life, with a focus on health and well-being." Journal of Military, Veteran and Family Health 9, no. 4 (2023): 111–21. http://dx.doi.org/10.3138/jmvfh-2023-0072.
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LAY SUMMARY The media can shape the opinions, beliefs, and attitudes of the public toward Veterans and Veteran issues and can also be a vital source of information for Veterans and their families. Accordingly, the authors used social science methods to collect, read, and analyze the tone and content of Canadian media coverage of Veteran transition from military to civilian life. The most common themes included posttraumatic stress disorder (PTSD), suicide, and issues with employment, housing, and social integration. Less common themes included financial issues, depression, and substance use. Comparing coverage between mainstream and specialist media emanating from the Canadian Armed Forces found patterns of reporting differ between military and mainstream media. Mainstream media often focus on PTSD and suicide, especially in the context of extremely rare, one-off events (e.g., the Lionel Desmond incident). In contrast, military media focus on practical aspects of transition, such as employment issues and support programs. Results of this study indicate a need for more educational resources and better outreach to help Canadian journalists report military-to-civilian transition in a comprehensive and balanced manner.
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Białek-Szkudlarek, Martyna. "Sustainable disclosures of polish banks – text mining analysis." Journal of Finance and Financial Law 1, no. 45 (2025): 73–91. https://doi.org/10.18778/2391-6478.1.45.04.
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The purpose of the article. Sustainability development issues, particularly Environmental, Social, and Governance (ESG) factors, are becoming increasingly relevant in corporate reporting, driven by rising environmental awareness and regulatory requirements. The aim of the study is the evaluation of ESG disclosures of selected Polish banks. The aim of the paper fills a gap in the Polish academic literature in economics and finance by analyzing the volume and size of non-financial ESG disclosures through computer text mining techniques. Methodology. This study applies text mining techniques to evaluate the ESG volume and size from 107 financial reports issued by Polish banks between 2006 and 2023. For this purpose, selected tools for computer-based analysis of textual data (text mining) are used. The primary methods include the emotional attitude (sentiment), analysis of the number of words regarding ESG, and analysis of the readability of ESG volume and size contained in company reports. Results of the research. The study reveals that ESG excerpts are more neutral or less optimistic compared to integrated reports, which tend to have a more positive tone. Additionally, sustainability disclosures are written in a complex language, and the volume of these reports has been increasing over time, likely due to new regulations and growing awareness of sustainability issues. The study focuses on Polish banks but suggests expanding future research to other sectors.
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BOGATYREV, Sergei Yu. "The sentiment analysis method in finance: The psychological-financial index." Finance and Credit 27, no. 3 (2021): 561–84. http://dx.doi.org/10.24891/fc.27.3.561.
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Subject. The article discusses contemporary means of measuring emotions of those who make financial decisions. Objectives. Analyzing key means of sentiment analysis in Russia and abroad, the study is to create a tool, which would be applicable to valuation and provide the unbiased information about the emotional state of those who locally make financial decisions. I also demonstrate limited capabilities of contemporary information systems in terms of emotion measurement, valuation, and present means to address the imperfection of the existing news tone measurement framework, unveil the content of new emotion measurement techniques, which would be useful to appraisers and cost analysts. Methods. The study is based on the induction and deduction for opinion poll processing, narrative analysis in data environments. I display the nexus with new technological means of modern information systems. Results. The article unveils the substance of key methods for setting the psychological-financial index, modern means of sentiment analysis in the new setting of the digital economy and Big Data. I scrutinize key constituents of the psychological-financial index and its use in the current circumstances of the post-COVID-19 economy. The article shows how psychological measurement methods can be implemented as part of the narrative analysis. Conclusions and Relevance. Financial analysts get new opportunities when using new achievements of behavioral finance and modern psychological studies. As the use of the psychological-financial index shows in analyzing market anomalies, there appear more opportunities for explaining the irrational behavior of market agents in its various segments. New standards are set as they are needed for valuation purposes, when financial analysts use them. Reporting is normalized. I provide an outlook of the analytical apparatus development and new indicators to use valuation results more efficiently. The findings hereof are applicable to the practice of contemporary appraisers, cost and fundamental analysts. It is especially important to use sentiment analysis tools in the digital economy, during the instability and crisis, change in the market paradigm, market shifts, changes in the comparability metrics, distortion of traditional financial and economic indicators, market volatility. The use of the psychological-financial index supplements and expands the scope of classical measurement tools and increase the quality of valuation.
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Laksmana, Dimas Indra, Nanik Astuti Rahman, Muhammad Istnaeny Hudha, and Faidliyah Nilna Minah. "Rancang Bangun Aplikasi Pelaporan Koperasi Wanita Bhakti Ibu Kota Malang." AKSIOLOGIYA : Jurnal Pengabdian Kepada Masyarakat 2, no. 2 (2018): 151. http://dx.doi.org/10.30651/aks.v2i2.1275.
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Statute Cooperative and Koperasi Wanita Bhakti Ibu is prepare accountability report, as well as submission of work plan and budget plan of expenditure of cooperative expenditure at Rapat Anggota Tahunan (RAT) Forum. Presentation of accountability report in RAT which is a forum for sharing is expected to give member's opportunity to objectively and constructively assess the existence and development of cooperative as a whole, in the field of organization, management, capital, business and other activities. The latest financial reports, therefore need improvement and innovation by creating a computerized reporting application to simplify and mitigate work and minimize errors in reporting figures. Research method used to analyze system on Koperasi and design system to cooperative. System analysis purpose is tobe able identify and evaluate problems that occur and expected needs, so it can be proposed improvement. After build application, resulted conclusions: (1) Based on trial, application run effectively, minimize errors in performing data storage and facilitate data search and transactions more quickly and accurately; (2) Based on trial, application capable reports of transaction or financial administration, according to user current desire.
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Alali, Fatima, and Silvia Romero. "Armor Holdings Inc." Journal of Business Ethics Education 17 (2020): 291–94. http://dx.doi.org/10.5840/jbee20201720.
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The U.S. Foreign Corrupt Practices Act (FCPA) has gained significant popularity in recent years across borders due to the increased investigation and penalties under the law. The following case is a real-life case that highlights the main provisions of the FCPA. Using cases in teaching an auditing or ethics course is much needed to develop students’ professional judgment, critical and analytical thinking skills and communication skills. Presently, there are a few cases that address the Foreign Corrupt Practices Act and its effect on financial reporting and auditor responsibilities about illegal acts. The Armor Holdings case is interesting and information is publicly available regarding the circumstances that describe the bribery act, lack of whistle-blower protection, the tone at the top, and the accounting treatment. In addition, the increase in actions brought by the Securities and Exchange Commission (SEC) under the FCPA since 2010 heightens the relevance of this case and underscores the need for students to learn the skills necessary to ensure compliance with FCPA and related key regulations such as the Sarbanes Oxley and the Dodd Frank Act. Therefore, cases like this one provide a rich tool to navigate topics and enforce students’ learning of client’s illegal actions and their consequences. These skills are invaluable in practice.
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Wang, Xiao, Feng Sun, Min Gyeong Kim, and Hyung Jong Na. "Developing a Novel Audit Risk Metric Through Sentiment Analysis." Sustainability 17, no. 6 (2025): 2460. https://doi.org/10.3390/su17062460.
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This study introduces the Audit Risk Sentiment Value (ARSV), a novel audit risk proxy that leverages sentiment analysis to address limitations in traditional audit risk measures such as audit fees (LNFEE), audit hours (LNHOUR), and discretionary accruals (|MJDA|). Traditional proxies primarily capture quantitative dimensions, overlooking qualitative insights embedded in audit report narratives. By systematically analyzing sentiment and tone, ARSV captures nuanced audit risk dimensions that reflect the auditor’s risk perception. The study validates ARSV using a dataset of South Korean firms listed on the KOSPI from 2018 to 2023. The results demonstrate the ARSV’s superior explanatory power, as confirmed through the Vuong test, showing consistent performance across binary and continuous measures of explanatory language. ARSV bridges the gap between qualitative and quantitative audit risk assessments, offering significant benefits to auditors, regulators, and investors. Its ability to enhance the interpretability of audit reports improves transparency and trust in financial reporting, addressing stakeholder demands for actionable, forward-looking information. Furthermore, ARSV aligns with global trends emphasizing sustainability and accountability by integrating qualitative insights into audit practices. While this study provides robust evidence supporting ARSV effectiveness, its focus on South Korean firms may limit its generalizability. Future research should explore ARSV application in diverse regulatory and cultural contexts and refine the sentiment analysis tools using advanced machine learning techniques. Expanding ARSV to include other unstructured data, such as management commentary, could further enhance its applicability. This study marks a significant step toward modernizing audit methodologies, aligning them with evolving demands for comprehensive and transparent financial reporting. The empirical analysis reveals that ARSV outperforms traditional audit risk proxies with significantly higher explanatory power. Specifically, ARSV achieved a pseudo R2 of 0.786, compared to 0.608 for LNFEE, 0.604 for LNHOUR, and 0.578 for |MJDA|. The Vuong test results further validate ARSV superiority, with Z-statistics of −12.168, −12.492, and −9.775 when compared against LNFEE, LNHOUR, and |MJDA|, respectively. The model incorporating ARSV demonstrated a 62.454 F-value and an Adjusted R2 of 0.599, highlighting its robustness and reliability in audit risk assessment. These quantitative metrics underscore ARSV’s effectiveness in capturing qualitative audit risk dimensions, offering a more precise and informative measure for stakeholders.
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Singla, Himani, and Vijay Singh. "Voluntary Disclosures and their Drivers: A Study of MDA Reports in India." Organizations and Markets in Emerging Economies 15, no. 1(30) (2024): 127–45. http://dx.doi.org/10.15388/omee.2024.15.7.
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The aim of this study is to examine the impact of corporate characteristics on voluntary disclosures of management discussion and analysis (MD&A) reports in India. Using a formal tone, the data was extracted from the annual reports of the top 100 listed firms available on the CMIE Prowess database for seven years (2016–2022). After excluding 23 companies from the financial and insurance sector, a panel regression method with the assistance of Gretl software was employed to investigate the relationship between the Management Discussion and Analysis Disclosure Index (MDADI) for voluntary aspects and various corporate attributes, with a total of 490 firm years of balanced observations. In India, firms follow the mandatory compliance of the MD&A reports, but voluntary disclosures are somehow those which are not much emphasized but are a good indication of firm performance and their accountability towards their stakeholders (Mayew et al., 2015). Our empirical findings reveal that profitability as a proxy to firm performance has a significant positive relationship with MD&A voluntary disclosures. Further, an insignificant association between VDS (Voluntary Disclosure Score) and the board size, presence of independent directors and firm size was found. This indicates that firm performance plays a significant role in adding more voluntary disclosures in MD&A reports. The possible reason for this could be the use of “Management Impression Strategy” in the MD&A reports, which means managers disclose more only when the firm has earned more and use impressive language to attract stakeholders. The outcomes of this research offer valuable insights for regulators, policymakers, and listed companies in India, aiding in the enhancement of MD&A reporting quality. Additionally, this study provides a roadmap for future research on MD&A reporting quality and corporate attributes in other emerging countries that have similar regulatory frameworks. This paper makes a timely and pertinent contribution to the scholarly discourse by shedding light on the relationship between MD&A disclosures and firm attributes. Its findings provide valuable insights for both academia and industry.
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Rajanbabu, Keerthana, Deepashree Joshi B, Vidya Ramkumar, Hannah Kuper, and Ramya Vaidyanath. "Early Hearing Detection and Intervention programmes for neonates, infants and children in non-Asian low-income and middle-income countries: a systematic review." BMJ Paediatrics Open 8, no. 1 (2024): e002794. http://dx.doi.org/10.1136/bmjpo-2024-002794.
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IntroductionEarly Hearing Detection and Intervention (EHDI) programmes were established to reduce the impact of hearing loss on children. High-income countries (HICs) have resources and knowledge to execute these programmes. However, financial and other resource constraints limit the availability of these programmes to low-income and middle-income countries (LMICs). Yet, LMICs have explored strategies to implement EHDI programmes in their context; the outcomes are still largely unknown.The aim of this study is to identify the various models of the EHDI program implemented in non-Asian LMICs.AimMethodStudies published between 2010 and 2023 reporting EHDI programmes in non-Asian LMICs for children were considered. The primary databases searched were PubMed, Scopus, Web of Science, EBSCOHost, EBSCO-CINAHL and ProQuest dissertations. The search results are summarised using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses chart. Quality appraisal and risk-of-bias assessment were assessed. Using the retrieved data, a narrative synthesis of the identified methods and forest plots for the prevalence estimate was created.ResultsFifty-six studies from 16 LMICs were included. They were grouped into 29 hearing screening programmes for neonates and infants and 26 programmes for older children. Predominantly hospital-based screening was employed for neonates and infants and school-based screening for older children. Two-stage otoacoustic emissions screening was employed for neonates and infants, while single-stage pure tone audiometry with otoscopy screening was used for older children. Predominantly, audiologists performed screening and diagnostics for neonates/infants while community health workers performed screening for the older children. Screening aspects were reported predominantly and not diagnostic evaluation/intervention outcomes. Overall, the economics of EHDI was reported only anecdotally in a few studies.ConclusionThe screening strategies were not uniform among non-Asian LMICs. The protocols used were similar to HICs, yet few developed protocols adapting the Joint Committee of Infant Hearing. However, long-term outcomes such as rate of identification, suitable intervention and their outcomes are not known. EHDI programmes with successful outcomes of early intervention must be studied and reported with economic evaluations.
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AZIZAN, SARINI BINTI. "CEO’S GENDER, POWER, OWNERSHIP: ROLES ON AUDIT REPORT LAG." Management and Accounting Review (MAR) 18, no. 2 (2019): 245. http://dx.doi.org/10.24191/mar.v18i2.958.
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This study examines the role of CEO’s gender, power and ownership on audit report lag. The rapid changes of market regulations and societal norms make CEO’s characteristics emerge as evolving risk factors for corporate governance and audit research. This raises the importance for research to understand their dynamic influences on corporate financial disclosure quality specifically, timeliness. This study hypothesises that different CEO’s characteristics set different tones to the audit discussion in the boardroom. To test the hypothesis, this study uses multiple secondary data from Compustat, Audit Analytics Execucomp and BoardEX. The CEO’s characteristics are divided to three dimensions that measure gender diversity, power and ownership concentration. This study provides evidence that both CEO’s ownership and power, which proxied by (1) industrial experience and (2) social network size are significantly associated with audit report lag. However, only the association with the CEO’s power reduces audit report lag and CEO’s ownership increases it. With regards to the gender diversity, it is only effective in reducing audit report lag if other CEO’s characteristics are also presence. Overall, the results provide support the study proposition in respect of the role of CEO’s characteristics towards promoting financial reporting timeliness.
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Negruni, Mauro Souza, and Mary Sandra Guerra Ashton. "Critérios de valoração de pinturas: capital estético e valor justo." Diálogo com a Economia Criativa 6, no. 16 (2021): 62. http://dx.doi.org/10.22398/2525-2828.61662-78.
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Este estudo abordou os critérios de valoração das pinturas, consideradas obras de arte, pelo aspecto contábil, suas normas de comparabilidade em princípios definidos a partir da adoção do IFRS (International Financial Reporting Standards) e os critérios aplicados por artistas pintores e gestores de galerias. Especificamente, se pretendeu validar a aderência dos padrões contábeis internacionais aos critérios de valoração de pinturas aplicados por operadores do mercado local do estado do Rio Grande do Sul. Por se tratar de uma pesquisa qualitativa e exploratória mesmo com amostra reduzida, os achados permitiram trazer à tona a discussão sobre a distinção de critérios e gerou contribuição ao tema da valoração econômica da arte, em confronto com a ciência da valoração dos patrimônios.Na análise emergiram relações que permitiram identificar uma lacuna entre os critérios e a proposição de uma nova categoria: o capital estético.
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Blum, D., and W. Boerckel. "Media coverage of lung cancer." Journal of Clinical Oncology 27, no. 15_suppl (2009): e20565-e20565. http://dx.doi.org/10.1200/jco.2009.27.15_suppl.e20565.
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e20565 Background: In 2000, a survey was conducted to assess media coverage for the four major cancers (breast, prostate, lung, colorectal). A 2004 follow-up survey revealed there were more lung cancer articles conveying positive messages and greater celebrity involvement and coverage of new treatments. A 2008 follow up survey was commissioned to determine whether the trend of increased coverage and favorability of message had persisted. Methods: Research firm Carma International analyzed a systematic random sample of 600 stories from U.S. media, including print, broadcast and web based sources (August, 2007-July, 2008). Coverage was analyzed by volume, story type, topics, awareness events and celebrity outreach. Topics and messages from this period were matched to those used in previous periods (August 1999 - July 2000, August 2003 - July 2004). Project parameters were held consistent between time periods to enable an accurate comparison of each cancer over time. Results: Lung cancer coverage experienced an increase in volume, up 23% (116 to143 stories) from the previous period, while breast cancer coverage increased 21% (333 to 402 stories). Lung cancer coverage was less positive with a drop to a slightly favorable rating of 48; research references declined from 29 to 14 and lung cancer garnered the lowest percentage of stories discussing treatment (14%); while tobacco/smoking references were found in 44% of lung cancer stories, up 31% from the earlier period and was the leading negative message. Positive message penetration declined over time for lung cancer coverage with 36% of stories carrying at least one positive message in 1999–2000 but only 28% in 2007–2008. Conclusions: While the volume of lung cancer coverage has increased significantly from over time, the tone of coverage has become significantly less favorable and more negative. Such findings identify a clear need to encourage media to consider how they report on lung cancer, specifically the prominence of smoking as a risk factor in cancer related stories, and to encourage reporting more hopeful messages including survivor stories, and new developments in lung cancer research/treatment. No significant financial relationships to disclose.
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Susliani, Winda, Ersa Tri Wahyuni, and Evita Puspitasari. "The Institutional Work of IFRS adoption in Telco Company: Transformation from US GAAP to IFRS." Jurnal Akuntansi Bisnis 20, no. 1 (2022): 1–16. http://dx.doi.org/10.24167/jab.v20i1.4401.
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AbstractThe literature on the IFRS adoption process to date has mainly focused on the macro level. This paper draws on an in-depth longitudinal analysis of the Indonesian company PT Telekomunikasi Indonesia Tbk to understand the role of institutional work in the transformation of organization from US GAAP to IFRS. The paper examines the work of actors to disrupt, create, and maintain the institution during the transition to IFRS. The study has revealed that the IFRS adoption at the company is beyond a shallow compliance of financial reporting standards but has significant impact on the company’s transformation as a whole. The IFRS adoption has transformed the business process and the organization culture. The study has also revealed that there are different types of institutional works during the four stages of institutional transformation of the company: Stability, Conflict, Change and Implementation. The tone of the top management board in the organization is crucial to the key actors to stay committed to the long transformation process. This paper contributes to the literature of the IFRS adoption process by providing a framework of the IFRS adoption at the micro level. The case study may assist other companies in their real transformation through embracing the IFRS. AbstrakLiteratur tentang proses adopsi IFRS sampai saat ini terutama berfokus pada tingkat makro. Makalah ini mengacu pada analisis longitudinal mendalam dari perusahaan Indonesia PT Telekomunikasi Indonesia Tbk untuk memahami peran kerja institusional dalam transformasi organisasi dari US GAAP ke IFRS. Makalah ini mengkaji pekerjaan para aktor untuk mengganggu, menciptakan, dan memelihara institusi selama transisi ke IFRS. Studi tersebut telah mengungkapkan bahwa adopsi IFRS di perusahaan berada di luar kepatuhan standar pelaporan keuangan yang dangkal tetapi memiliki dampak signifikan pada transformasi perusahaan secara keseluruhan. Adopsi IFRS telah mengubah proses bisnis dan budaya organisasi. Studi ini juga mengungkapkan bahwa ada berbagai jenis pekerjaan institusional selama empat tahap transformasi institusional perusahaan: Stabilitas, Konflik, Perubahan dan Implementasi. Nada dewan manajemen puncak dalam organisasi sangat penting bagi para aktor kunci untuk tetap berkomitmen pada proses transformasi yang panjang. Makalah ini berkontribusi pada literatur proses adopsi IFRS dengan menyediakan kerangka kerja adopsi IFRS di tingkat mikro. Studi kasus dapat membantu perusahaan lain dalam transformasi nyata mereka dengan merangkul IFRS.
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Madrick, Jeffrey. "Financial Reporting." Harvard International Journal of Press/Politics 8, no. 1 (2003): 3–7. http://dx.doi.org/10.1177/1081180x02238781.
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Schauß, Joachim. "Financial Reporting." Controlling & Management 55, no. 2 (2011): 117–18. http://dx.doi.org/10.1007/s12176-011-0034-6.
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Barker, Richard. "The revolution ahead in financial reporting: reporting financial performance." Balance Sheet 11, no. 4 (2003): 19–23. http://dx.doi.org/10.1108/09657960310502502.
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Ryan, Stephen G. "Financial Reporting for Financial Instruments." Foundations and Trends® in Accounting 6, no. 3-4 (2011): 187–354. http://dx.doi.org/10.1561/1400000021.
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Pouryousof, Azam, Farzaneh Nassirzadeh, and Davood Askarany. "Inconsistency in Managers’ Disclosure Tone: The Signalling Perspective." Risks 11, no. 12 (2023): 205. http://dx.doi.org/10.3390/risks11120205.
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This article examines the factors contributing to the disparity in managers’ disclosure tone from a signalling perspective. According to this viewpoint, managers intentionally choose their tone to convey information to the market. To determine the origin of tone inconsistency, we explored the association between future financial performance (as measured by the rate of return on assets (ROA) and rate of return on equity (ROE)) and future financial risk (as measured by the standard deviation of ROA and ROE) with the tone of management discussion and analyses (MD&As). The Loughran and McDonald dictionaries were utilised to assess managers’ tone in the MD&As. Our dataset consisted of 1510 MD&As from 156 companies listed on the Tehran Stock Exchange, covering 2013 to 2022. Multiple regression analysis was employed, controlling for industry and year fixed effects. The findings revealed a significant relationship between future financial performance, future financial risk, and MD&A tone inconsistency. Thus, the biased tone observed in Iranian managers’ MD&As can be explained by signalling theory. This study contributes to the existing literature by being the first to investigate signalling as a source of inconsistency in managers’ disclosure tone.