Template-Type: ReDIF-Article 1.0 Author-Name: Zane Swanson Author-X-Name-First: Zane Author-X-Name-Last: Swanson Author-Name: Yinghong Zhang Author-X-Name-First: Yinghong Author-X-Name-Last: Zhang Title: Do covenant violations affect audit report timeliness? Abstract: We investigate the impact of covenant violations on audit report timeliness. We argue that the existence of covenant violations might motivate clients or banks to seek waivers or renegotiations of current lending contracts. Otherwise, auditors might perform more audit tests before issuing audit opinions. Ultimately, auditors will increase the number of days to complete the audit. Our major findings are consistent with our prediction. In addition, we find that the presence of early covenant violations further increases audit delays. Our findings identify another factor affecting the audit report timeliness and one economic consequence of covenant violations. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 1-23 Issue: 1 Volume: 14 Year: 2018 Keywords: audit report timeliness; audit delay; audit report lag; covenant violation; technical default; private lending agreements. File-URL: http://www.inderscience.com/link.php?id=89399 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:1-23 Template-Type: ReDIF-Article 1.0 Author-Name: Walaa Wahid ElKelish Author-X-Name-First: Walaa Wahid Author-X-Name-Last: ElKelish Author-Name: Robert C. Rickards Author-X-Name-First: Robert C. Author-X-Name-Last: Rickards Title: Organisational culture's impact on management accounting and control practices in the United Arab Emirates Abstract: This paper investigates the impact of organisational culture on management accounting and control (MAC) practices in the United Arab Emirates (UAE). Data were collected using a self-administered survey of companies and multiple regression analysis (ordinary least squares) was employed to test the study's hypotheses. Empirical results show internal organisational cultures characterised by high levels of adhocracy (adaptability) or low levels of hierarchy appear to be more conducive to the adoption of MAC practices. On the other hand, organisations with a more market-oriented culture seem to be less reliant on budgeting as a means for exerting management control. In addition, the service industry displays significant differences in its MAC practices relative to other sectors' behaviour. This investigation thus yields new insights into the influences affecting implementation of MAC practices, which is useful for researchers, corporate managers, and other stakeholders. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 24-46 Issue: 1 Volume: 14 Year: 2018 Keywords: management accounting; organisational culture; United Arab Emirates; UAE. File-URL: http://www.inderscience.com/link.php?id=89408 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:24-46 Template-Type: ReDIF-Article 1.0 Author-Name: Yanthi Hutagaol-Martowidjojo Author-X-Name-First: Yanthi Author-X-Name-Last: Hutagaol-Martowidjojo Author-Name: Felita Widyanto Author-X-Name-First: Felita Author-X-Name-Last: Widyanto Title: Earnings quality of Indonesian firms surrounding initial public offerings Abstract: This research aims to examine the changes in earnings quality of Indonesian firms transitioning from private to public companies by examining accounting-based attributes of earnings; accrual quality, earnings persistence, and earnings predictability, before and after IPO. Accrual quality is assessed using the abnormal accrual model and Dechow and Dichev (DD) model; earnings persistence and predictability are assessed through net income autoregressive model. Using 103 Indonesian non-finance IPO firms, this research concludes that earnings quality of IPO firms changed along with the alteration of their status from private to public firms. Post-IPO (after becoming public firms), the sample shows a higher quality of earnings in terms of accrual quality and earnings persistence increases after IPO. However, this research could not reject the hypothesis of decreasing post-IPO earnings predictability due to the nature of IPO firms. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 47-62 Issue: 1 Volume: 14 Year: 2018 Keywords: earnings quality; initial public offerings; IPOs; accrual quality; earnings persistence; earnings predictability; Indonesia. File-URL: http://www.inderscience.com/link.php?id=89413 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:47-62 Template-Type: ReDIF-Article 1.0 Author-Name: Andrews Owusu Author-X-Name-First: Andrews Author-X-Name-Last: Owusu Author-Name: Charlie Weir Author-X-Name-First: Charlie Author-X-Name-Last: Weir Title: Agency costs, ownership structure and corporate governance mechanisms in Ghana Abstract: This paper analyses the relationship between agency costs, ownership structure and corporate governance mechanisms in Ghana for the study period 2000-2009. Our results show that smaller board size and the presence of audit and remuneration committees decrease agency costs. We also find that higher managerial and institutional ownership reduces agency costs. However, duality and the proportion of non-executive directors on the board have no effect on agency costs, suggesting that not all board structure governance mechanisms are effective in mitigating agency costs. Interestingly, the non-board structure code recommendations such as improved shareholder voting rights, the adoption of International Financial Reporting Standards and auditor quality have also reduced agency costs. Overall, we find that the introduction of the Ghanaian Code played significant role in reducing agency costs. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 63-84 Issue: 1 Volume: 14 Year: 2018 Keywords: agency costs; corporate governance; ownership structure; Ghana. File-URL: http://www.inderscience.com/link.php?id=89414 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:63-84 Template-Type: ReDIF-Article 1.0 Author-Name: Sonja Pichler Author-X-Name-First: Sonja Author-X-Name-Last: Pichler Author-Name: Michela Cordazzo Author-X-Name-First: Michela Author-X-Name-Last: Cordazzo Author-Name: Paola Rossi Author-X-Name-First: Paola Author-X-Name-Last: Rossi Title: An analysis of the firms-specific determinants influencing the voluntary IFRS adoption: evidence from Italian private firms Abstract: The EU regulation 1606/2002 enhances the financial statement comparability by requiring the IFRS mandatory application. In Italy, the implementation of EU regulation states that listed firms are required to prepare their financial statements in accordance with IFRS, then extended to private firms on a voluntary basis. The study aims to examine the influence of some firm-specific characteristics on voluntary IFRS adoption by analysing a selected sample of Italian private firms over 2006-2010. The results show that firms are more likely to adopt IFRS in their separate financial statements if there is the presence of ownership diffusion and a Big-4 along with greater profitability. Such adoption is not influenced by whether firms register a high level of capital intensity and leverage, and it does not increase with the firm size or level of foreign sales. Our findings may also represent a primary approach to investigate whether IFRS adoption could be beneficial for SMEs, as a large part of sampled firms may be classified according to the EU definition of SME. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 85-104 Issue: 1 Volume: 14 Year: 2018 Keywords: voluntary IFRS adoption; firm-specific determinants; accounting choices; private firms; Italy. File-URL: http://www.inderscience.com/link.php?id=89418 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:85-104 Template-Type: ReDIF-Article 1.0 Author-Name: Jose Miranda-Lopez Author-X-Name-First: Jose Author-X-Name-Last: Miranda-Lopez Author-Name: Isho Tama-Sweet Author-X-Name-First: Isho Author-X-Name-Last: Tama-Sweet Title: The impact of equity share class on the information content of earnings and cash flows: evidence from Mexico Abstract: We investigate the relative and incremental information content of earnings and cash flows in Mexico. Mexico provides a unique setting to test this relation because firms are allowed to issue different classes of equity shares which appeal to different investors. Share classes differentiate between investors based on nation of origin (domestic vs. foreign), voting rights and cash flow rights. We find that, for the market as a whole, both earnings and cash flows provide incremental information and earnings provide greater relative information. We also test these relations for each share class individually and find that cash flows provide the greatest amount of information when investors are at the greatest risk of expropriation. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 105-127 Issue: 2/3 Volume: 14 Year: 2018 Keywords: information content; share class; cash flows; earnings; leverage; firm size; growth; Mexico. File-URL: http://www.inderscience.com/link.php?id=91058 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:2/3:p:105-127 Template-Type: ReDIF-Article 1.0 Author-Name: Sandhya Bhatia Author-X-Name-First: Sandhya Author-X-Name-Last: Bhatia Author-Name: Arindam Tripathy Author-X-Name-First: Arindam Author-X-Name-Last: Tripathy Title: Impact of IFRS adoption on reporting of firm efficiency: case of Indian IT firms Abstract: This study examines the impact of the transition from generally accepted accounting principles of Indian jurisdiction (IGAAP) to international financial reporting standards (IFRS) on IT firms' reported performance efficiencies that are measured through different types of efficiencies of firms with the application of window analysis based on data envelopment analysis (DEA). We find that IT firms, in general, are found to operate on increasing returns to scale (IRS) indicating thereby cost diaspora in their advantage while raising the scale of production. Our statistical analysis also provides enough evidence that relative gross, technical and scale efficiencies of the firms remain relatively unchanged with a switching of accounting standards from IGAAP to IFRS. The semblance of impact on the reported relative performance efficiencies of the competing firms indicates the resemblances of accounting procedures that are being used under both standards in measuring the accounting amounts. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 128-158 Issue: 2/3 Volume: 14 Year: 2018 Keywords: international financial reporting standards; IFRS; Indian generally accepted accounting standards; IGAAP; data envelopment analysis; DEA; gross efficiency; technical efficiency; scale efficiency. File-URL: http://www.inderscience.com/link.php?id=91061 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:2/3:p:128-158 Template-Type: ReDIF-Article 1.0 Author-Name: Rachana Kalelkar Author-X-Name-First: Rachana Author-X-Name-Last: Kalelkar Author-Name: Sarfraz Khan Author-X-Name-First: Sarfraz Author-X-Name-Last: Khan Author-Name: Sung-Jin Park Author-X-Name-First: Sung-Jin Author-X-Name-Last: Park Title: Excess audit committee compensation and audit pricing Abstract: In this study, we explore audit pricing decisions in the presence of excess audit committee compensation. Specifically, we examine whether excess compensation of audit committee members is related to audit fees. We find that excess compensation is positively associated with audit fees. We further examine whether the excess compensation affects auditors' pricing of earnings manipulation, and find evidence suggesting that auditors perceive earnings manipulation risk relatively low when the audit committee members are paid excess compensation. Overall, our results support the notion that audit committee excess compensation represents greater monitoring over a firm's financial reporting process, which affects auditor's risk assessment. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 159-182 Issue: 2/3 Volume: 14 Year: 2018 Keywords: excess audit committee compensation; audit fees; earnings manipulation risk. File-URL: http://www.inderscience.com/link.php?id=91062 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:2/3:p:159-182 Template-Type: ReDIF-Article 1.0 Author-Name: Tânia Menezes Montenegro Author-X-Name-First: Tânia Menezes Author-X-Name-Last: Montenegro Author-Name: Filomena Antunes Brás Author-X-Name-First: Filomena Antunes Author-X-Name-Last: Brás Title: A review of the concept and measures of audit quality across three decades of research Abstract: This study provides a comprehensive literature review of audit quality and it explores three decades of audit research (1980 to 2010). The DeFond and Zhang (2014) framework is used to present and discuss several perspectives on the concept and measures of audit quality, its inherent limitations and main strengths, adding US versus international studies comparative approach. The study is of interest to students, academic researchers, practitioners, standard setters/regulators and all those interested in understanding audit quality, from a US versus international perspective. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 183-253 Issue: 2/3 Volume: 14 Year: 2018 Keywords: audit quality; audit quality definition; audit quality dimensions; audit quality proxies; audit quality indicators; USA; international. File-URL: http://www.inderscience.com/link.php?id=91063 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:2/3:p:183-253 Template-Type: ReDIF-Article 1.0 Author-Name: Sharad Asthana Author-X-Name-First: Sharad Author-X-Name-Last: Asthana Author-Name: Rachana Kalelkar Author-X-Name-First: Rachana Author-X-Name-Last: Kalelkar Author-Name: K.K. Raman Author-X-Name-First: K.K. Author-X-Name-Last: Raman Title: Unintended consequences of Big 4 auditor office-level industry specialisation Abstract: The Big 4 audit firms currently dominate the US audit market. We investigate whether the <i>extent</i> of a Big 4 local office's dependence on industry specialist clients impacts audit effort/earnings quality for the office's specialist as well as <i>non</i>-specialist clients. Our findings suggest that <i>greater</i> dependence on specialist clients is associated with higher audit effort/earnings quality for specialist clients but also with <i>lower</i> audit effort/earnings quality for the office's <i>non</i>-specialist clients. Our results hold when we propensity-match specialist and non-specialist clients to control for client characteristics as a possible confounding explanation. Our study is important, because it: 1) contributes to prior research that is largely silent on whether cross-sectional variations in reputation for industry-expertise are associated with variations in audit quality (DeFond and Zhang, 2014); 2) suggests that, it would be appropriate for PCAOB inspectors to focus on non-specialist clients at audit offices with greater dependence on specialist clients as an area representing higher risk of lower audit effort/quality. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 254-289 Issue: 2/3 Volume: 14 Year: 2018 Keywords: Big 4; industry specialisation; non-specialist clients; PCAOB risk-based inspections; audit effort; earnings quality. File-URL: http://www.inderscience.com/link.php?id=91066 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:2/3:p:254-289 Template-Type: ReDIF-Article 1.0 Author-Name: Sanna Tervo Author-X-Name-First: Sanna Author-X-Name-Last: Tervo Author-Name: Annukka Jokipii Author-X-Name-First: Annukka Author-X-Name-Last: Jokipii Title: The value of a voluntary audit in debt financing: evidence from small privately held companies Abstract: This study examines the effects of voluntary audits on the quality of financial information and the cost of debt in small privately held companies using a sample of 5,254 observations spanning 2007-2012. Prior studies [see Blackwell et al. (1998), Minnis (2011) and Kim et al. (2011)] suggest that audited firms have a significantly lower cost of debt. In contrast to prior studies, our archival evidence shows that firms opting for a voluntary audit pay a slightly higher interest rate on their debt than do the unaudited firms among the set examined. This result is however supported by Niemi et al. (2012) who found that having a voluntary audit is positively associated with financial distress and by Dedman et al. (2014) who found that riskier companies are more likely to purchase voluntary audits. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 291-314 Issue: 4 Volume: 14 Year: 2018 Keywords: voluntary audit; financial distress; financial statement; discretionary accruals; financial information; reliability; privately held companies; debt financing; financial information quality; interest rate; accounting; performance evaluation; Finland. File-URL: http://www.inderscience.com/link.php?id=95103 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:4:p:291-314 Template-Type: ReDIF-Article 1.0 Author-Name: Imen Khelil Author-X-Name-First: Imen Author-X-Name-Last: Khelil Author-Name: Khaled Hussainey Author-X-Name-First: Khaled Author-X-Name-Last: Hussainey Author-Name: Hédi Noubbigh Author-X-Name-First: Hédi Author-X-Name-Last: Noubbigh Title: Chief audit executives' perceptions of drivers of moral courage: Tunisian evidence Abstract: A string of accounting-related scandals has revealed key shortcomings in internal auditor truthfulness. These scandals have led researchers, professional organisations and institutions to question causes of internal auditor silence and the failure of ethical guidelines. This study responds to these questions by revealing moral courage as the missing ingredient in internal auditor ethical instruction and as the tool needed for internal auditors to preserve their integrity and overcome their fears. Building on what is currently known of internal auditors and moral courage, this study sheds light on professional and ethical requirements placed on internal auditors to tell the truth, and it emphasises the role of moral courage in guiding their ethical behaviours. It also considers what must be known about the development of moral courage among internal auditors and seeks to identify the factors that promote internal auditors' moral courage through 30 structured interviews with chief audit executives. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 315-337 Issue: 4 Volume: 14 Year: 2018 Keywords: internal auditor; management fraud; fear; silence; moral courage; ethical behaviour; telling the truth; Tunisia; chief audit executives; drivers of moral courage. File-URL: http://www.inderscience.com/link.php?id=95107 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:4:p:315-337 Template-Type: ReDIF-Article 1.0 Author-Name: Galina G. Preobragenskaya Author-X-Name-First: Galina G. Author-X-Name-Last: Preobragenskaya Author-Name: Robert W. McGee Author-X-Name-First: Robert W. Author-X-Name-Last: McGee Author-Name: Iliya Komarev Author-X-Name-First: Iliya Author-X-Name-Last: Komarev Title: Public perception of the role of accounting in a transition economy: the case of Russia Abstract: This paper explores the perceived role of accounting in Russia, a country transitioning from a post-socialist to a market economy. A survey was conducted to examine the public views on: 1) the main functions of accounting; 2) the primary role of users of financial statements; 3) the level of demand for financial information; 4) the perceived reliability of financial statements; 5) the importance of reliable financial information. Our results show that the Russian accounting system can be classified as macro-user oriented. Although accounting is perceived to serve chiefly management needs, the main purposes of financial reporting are perceived to be tax calculation and compliance with government reporting requirements, and the primary users of financial statements are supposed to be business owners and government. The public feels that financial statements lack reliability, and companies manage earnings downwards. The study identifies potential reasons for misreporting. The financial reporting reliability is perceived to have greater impact on the country's economy than on the person. Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 338-363 Issue: 4 Volume: 14 Year: 2018 Keywords: financial reporting; Russia; transition economy; opinion survey; performance evaluation; people perceptions; society; accounting. File-URL: http://www.inderscience.com/link.php?id=95110 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:4:p:338-363 Template-Type: ReDIF-Article 1.0 Author-Name: Pooja Kumari Author-X-Name-First: Pooja Author-X-Name-Last: Kumari Author-Name: Chandra Sekhar Mishra Author-X-Name-First: Chandra Sekhar Author-X-Name-Last: Mishra Title: Value relevance of earnings and book value in India: significance of accounting reforms and intangible-intensity in an emerging market Abstract: The study investigates the value relevance of earnings and book value on the Bombay Stock Exchange over 21 years of accounting regulation reforms in India from 1995 to 2015. In developed markets accounting information has lost its relevance due to shift in economies from tangible to intangible intensity. However, the relevance of accounting information in an emerging market increases with the improvements in accounting regulation and market environment. Thus, we also examined the effects of both accounting regulation reforms and intangible intensity on the relevance of earnings and book value in an emerging market. Results indicate that the relevance of the combined and incremental value of both earnings and book value is increased with the improvements in accounting regulation reforms in India. Furthermore, the intangible intensity is positively (negatively) significant to explain the change in the incremental explanatory power of earnings (book value). Journal: Int. J. of Accounting, Auditing and Performance Evaluation Pages: 364-387 Issue: 4 Volume: 14 Year: 2018 Keywords: accounting information; value relevance; emerging market; accounting regulation reforms; intangible intensity; India. File-URL: http://www.inderscience.com/link.php?id=95112 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:ids:ijaape:v:14:y:2018:i:4:p:364-387