International Journal of Accounting, Auditing and Performance Evaluation (37 papers in press)

Regular Issues

• Disclosure of forward-looking information: does overlapping audit committee membership matter?  
  by Hidaya Al Lawati, Khaled Hussainey 
  Abstract: We examine whether overlapping audit committee (AC) membership affects the forward-looking content of the chairman reports. We use content analysis to measure levels of forward-looking disclosure (FLD) for 48 bank-year observations from eight banks listed on Muscat Securities Market in Oman for the period 2014-2019. Our regression analysis shows that overlapping AC membership positively affects FLD. The evidence from this study suggests that a consideration of AC directors attributes (e.g. overcommitted AC members) is needed to understand their role in the boardroom or in the subcommittees. An implication of the result is that the Omani corporate governance code should provide guidelines on the type and proportion of the overlapping AC membership. Furthermore, the code could encourage AC members to be overlapped across different committees as this could have a positive impact on corporate disclosure practice. Our study has demonstrated, for the first time, that overlapped AC members enhance the forward-looking content of chairman reports.
  Keywords: overlapping audit committee membership; forward-looking disclosure; chairman reports; content analysis; Oman.
  
  
• The effectiveness of government internal auditor: evidence from Indonesia  
  by Sutaryo Sutaryo, Arifudin Tri Anto 
  Abstract: We analyse the effectiveness of the internal audit of the governments in Indonesia. As independent variables, we examine the role of professional proficiency of internal auditors, quality of audit work, organisational independence, auditor career and advancement, and support from the leaders of internal audit entity, by geography, gender, education level and functional position of auditor as control variables. This study uses a structured questionnaire, distributed to 385 functional auditors as our respondents that came from the State Development Audit Agency (BPKP). The results show that professional proficiency of internal auditors, quality of audit work, organisational independence, career path and development, and the support from the internal audit entity leadership have positive influence on governments internal audit effectiveness in Indonesia. Nevertheless, all of the variables are still possible to develop appropriate additional test results. Internal audit entity requires internal auditors who have the professional proficiency, independence, and quality of the audit work results. Internal audit entity should also implement the career policy for auditors and give full support to the implementation of the audit. The findings are discussed in terms of how they can assist in enhancing internal audit effectiveness and provide added value to the auditee.
  Keywords: effectiveness of the internal audit; professional proficiency of internal auditors; organisational independence; support from internal audit entity leadership.
  
  
• Does foreign ownership affect audit committee adoption? Evidence from Brazilian companies  
  by Daniel Vancin, Clea Macagnan, Lucas Cervo, Cristiano Costa 
  Abstract: The aim of this article is to verify whether the voluntary constitution of the audit committee in companies listed in the Brazilian stock market could be explained by the presence of foreign stockholders. The method used was a probit model with instrumental variables, and the results confirmed the hypothesis, indicating that there is an U-shaped relationship: the probability of adoption of the audit committee slightly decreases at low levels of foreign participation and increases after reaching a cutoff level. This result is in line with previous literature on the role of foreign investors in improving corporate governance in companies in developing countries to protect themselves from expropriation by local stockholders and managers.
  Keywords: voluntary audit committee; foreign stockholders; corporate governance; monitoring; determinants.
  
  
• Does the market react to mandating ESG disclosure? A regression discontinuity based evidence  
  by Zelalem Abay 
  Abstract: This study examines the stock market reaction to the recently adopted European Union Directive 95/2014 on mandating certain entities to disclose non-financial information, commonly termed ESG disclosure. Owing to the cost burden of small and medium-sized enterprises, previously voluntarily disclosed information is now mandated only for large undertakings. This size-based directive provides an opportunity to apply a regression discontinuity design, the quasi-experimental research approach. Using a sample of European firms, the study finds that firms on both sides of the threshold react negatively to the directive, with an insignificant difference in these negative market reactions. These findings potentially contribute to the existing literature by documenting new evidence of size-based regulations using a unique approach, indicating that a wider market reacts negatively, irrespective of size, which the directive considered as the basis for compliance. The novelty of this study refers to the application of the unique regression discontinuity design for an event study to exploit the size-based nature of the directive.
  Keywords: ESG; non-financial disclosure; regression discontinuity design; event study, market reaction.
  
  
• The use of the internal audit function as management training ground and internal audit quality  
  by Grace Mubako, Tatiana Mazza 
  Abstract: This study examined the association between the practice of using the internal audit function (IAF) as management training ground (MTG) and internal audit quality, by analysing data from selected questions from the IIA 2015 Common Body of Knowledge Survey. Findings suggest that while auditors in organisations that use the IAF as MTG (MTG auditors) were less likely to have internal audit qualifications, they were more likely to be in compliance with IIA standards and were more confident in their mastery of internal audit competencies, compared to auditors in organisations not using the IAF as MTG (non-MTG auditors). Additionally, MTG auditors reported reduced objectivity compared to non-MTG auditors. Findings from this study provide a better understanding of how the use of the IAF as MTG may affect internal audit quality.
  Keywords: internal audit; management training ground; competence; IIA; experience; audit quality; qualifications; objectivity.
  
  
• Examining the impact of top-management teams on performance measurement system design: a social network perspective  
  by Mohamed M. M. Ahmed 
  Abstract: This study aims to explore the relationship between informal social relations between top-managers and the sophistication of the performance measurement system (PMS) in small-and-medium-sized manufacturing companies. Drawing on social network theory, the paper argues that when TMT members are networked by interpersonal ties, this would provide top managers with easier access to information and exchange of knowledge. Hence, these informal relationships could facilitate their control over day-to-day activities, and there would be a lesser need for adopting sophisticated management control practices. Using survey data on 2058 manufacturing SMEs from World Management Survey (WMS) project, the results support the predicted negative impact of interpersonal ties in TMTs on PMS sophistication. The results also shed light on the key role of CEO in SMEs, by showing that this negative association is larger in TMTs led by internally promoted CEOs than outsider CEOs. The paper also predicts and finds that interpersonal ties between TMTs moderate the extent to which SMEs adopt sophisticated PMS owing to pursuing differentiation strategic priorities.
  Keywords: performance measurement system; TMT interpersonal ties; CEO origin; social network theory; differentiation strategy; manufacturing SMEs.
  
  
• The use and determinants of online financial reports in Europe: an empirical investigation of listed firms  
  by Hendrik Pieper, Philipp Ottenstein, Henning Zülch 
  Abstract: The European Commission published the ESEF regulation act for mandatory adoption of XBRL and HTML usage by European listed firms. The results of prior quantitative and qualitative studies already evidence the growing dissemination of voluntary HTML-formatted financial information on the internet and reveal its perceived benefits. However, there is a lack of empirical evidence on the determinants of standardised financial reports in accordance with IFRS that are voluntarily published in HTML format, called online financial reports (OFR). We investigate the determinants of the decision of European listed firms to publish OFR from 2014 to 2019. We find that the decision of using an OFR is adversely affected by firm leverage and ownership concentration. Our findings contribute to the ongoing research on internet financial reporting and aim to improve our understanding of what determines OFR usage in an international context. Our findings may have practical implications for the disclosure strategy of listed firms.
  Keywords: online financial report; HTML; capital markets; determinants; ESEF; internet financial reporting; cross-listing; leverage; ownership concentration; firm size; empirical research; Europe.
  DOI: 10.1504/IJAAPE.2022.10056224
   
  
• Investigating the effect of goods and service tax on operational performance, cost efficiency and profit margins of MSMEs  
  by Neba Bhalla, Rakesh Kumar Sharma, Inderjit Kaur 
  Abstract: Tax and the economy go hand in hand, and whenever any overhaul in tax structure takes place, it becomes vital to examine the affect on micro units of the economy and its businesses. The present study evaluates the impact of Goods and Service Tax (GST) on the performance of Indian Micro, Small, and Medium Enterprises (MSMEs) after the tax system changes in India. The empirical findings from ordinal regression results reveal that tax system restructuring has reduced the overall cost of the firms and improved operative performance. Moreover, the technological shift by the GST Network led to paperless compliances, which saved the productive time of MSMEs. Further, the results reveal that the micro-units have shown a pronounced significant and positive impact amongst all the enterprises. The results may aid other countries in understanding the after-effect of tax reform on MSMEs' performance. Further, the findings may help institutional investors, particularly foreign institutional investors (FII) and credit rating agencies, as the study focuses on the firms' profitability. The investors remain interested in investing in the MSME sector owing to their higher returns.
  Keywords: tax reform; goods and service tax; business performance; stepwise regression; logistic regression; micro; small and medium enterprises.
  
  
• Long-term analysts' forecasts and real earnings management  
  by Wael Aguir, Howard Griffin, Linxiao Liu, Zhenfeng Liu 
  Abstract: This paper investigates the implications of earnings manipulations through real activities for financial analysts. In particular, it examines the extent to which analysts consider the effects of real earnings management on company performance when they make long-term earnings growth projections. Our results show that analysts issue lower long-term earnings growth forecasts for firms with higher levels of real earnings management. In addition, we find that analysts produce less accurate long-term earnings forecasts in the presence of real activities manipulation and that the forecast bias increases with the level of real earnings management. Our results from the sensitivity tests confirm our findings that financial analysts are able to recognise real earnings management and penalise firms that engage in it when they issue long-term earnings growth forecasts.
  Keywords: real earnings management; long-term analysts’ forecasts; earnings growth forecasts.
  
  
• Up until the consolidation on the IFRS Foundation: the companies that have been advancing integrated reporting  
  by Ana Lopes, Silpa Bovane, Daniela Penela 
  Abstract: This study seeks to develop an in-depth understanding of where companies reporting under the Integrated Reporting (IR) framework are located, what their main characteristics are, whether a change in firm value has occurred after IR adoption, and whether firm value varies depending on IR quality. Knowing who has been involved in the thinking and processes underpinning IR may further encourage companies to proceed, under the direction of the IFRS Foundation, with future practices associated with non-financial reporting. The results of this study show that IR reporters are distributed across 43 countries and five regions the majority from South Africa, followed by Japan and the UK. After adoption, IR reporters are found to be significantly larger, less profitable, and command greater market value. Those with higher-quality IR reporting are significantly larger and more profitable than their counterparts. Yet, no significant differences in firm value were found between IR quality groups.
  Keywords: integrated reporting; IIRC; IR examples database; financial reporting; non-financial reporting.
  DOI: 10.1504/IJAAPE.2023.10056384
   
  
• Key audit matters: a systematic review  
  by Mahmoud Elmarzouky, Khaled Hussainey, Tarek Abdelfattah 
  Abstract: Key Audit Matters (KAMs) play a substantial role in financial reporting and have garnered increasing attention in recent years. This systematic review of 119 articles and reports published between 2013 and 2023 contributes to the audit and financial reporting field by identifying research gaps and suggesting areas for future research. The findings show that KAMs impact financial reporting and emphasise the need for further investigation into their effectiveness in improving financial reporting quality. This study provides valuable insights for regulators, stakeholders, and the academic and professional community and highlights the importance of future research on KAMs to assess the success of regulatory changes in audit reporting.
  Keywords: KAMs; extended audit report; audit quality; financial reporting.
  
  
• Do board and audit characteristics affect earnings management in the time of Covid-19?  
  by Ahmed Imran Hunjra, Fitim Deari, Rashid Mehmood, Mamdouh Abdulaziz Saleh Al-Faryan 
  Abstract: An effective board of directors and audit characteristics play an important part in transparency in financial information. We investigate the impact of board and audit characteristics on earnings management of bank in South Asia. We obtain data from the Data Stream of 109 listed banks of the four South Asian countries for the time spanning from 2010 to 2021. We apply the Fixed effect regression model and Generalized Method of Moments (GMM) to analyse the results. We discover that the size and board meeting frequency have a substantial negative impact on earnings management. Additionally, audit characteristics like the quality of audits, size and activity of the audit committee have a negative impact on earnings management. While CEO duality has a positive impact on earnings management in selected South Asian banks. Our study is useful for management to be aware of their aggressive policies and outcomes of manipulations in earnings.
  Keywords: corporate governance; audit characteristics; board characteristics; earnings management; banks; South Asian countries.
  DOI: 10.1504/IJAAPE.2023.10056241
   
  

Special Issue on: EAMMIS 2021 Accounting and Big Data Analytics

• Do Islamic banks react due to the impact of Charia Supervisory Board on their financial performance? A joint worldwide analysis  
  by Achraf Haddad, Abdelfattah Bouri 
  Abstract: The real impacts generated by the Charia Supervisory Board (CSB) on the Islamic banks financial performance have not yet been thoroughly investigated in detail. To explore the relationship between the selected variables through the application of the fixed and random effects method, we used 180 Islamic banks from 56 countries during the period (2010-2019). The empirical results revealed that the CSB size, the number of meetings and the presence of Charia advisers improved the Islamic banks financial performance. However, the presence of financial or accounting experts in the CSB degraded their financial performance. The IBs CSB size ensured the skills diversification, since the number offers them the necessary time to discuss monetary exchanges, investment choices and complaints from other committees, while the existence of specialist advisers has optimised the respect for Charia standards. Nevertheless, the impact type coming from the experts confirmed either their qualification insufficiency or their training inadequacy in terms of Fikh Al-Muamalat.
  Keywords: financial performance; Islamic banks; Charia Supervisory Board; financial stability period.
  
  

Special Issue on: Accounting, Auditing and Finance research in Times of the COVID-19 Pandemic

• Financial reporting considerations in response to the COVID-19 pandemic: empirical evidence from the UAE accounting professionals  
  by Riham Muqattash, Mohamed Kolsi, Ahmad Al-Hiyari 
  Abstract: The COVID-19 pandemic and its economic ramifications have heightened the need for investors and other stakeholders to have access to higher-quality financial information. In this study, we explore the impact of the current pandemic on firm value and financial reporting in relation to the international financial reporting standards (IFRS) from the viewpoint of accounting professionals in the United Arab Emirates (UAE). Mainly, we use a survey-based questionnaire targeting auditing firms. We adopt a qualitative approach based on the principal component analysis (PCA). Results indicate that the COVID-19 pandemic significantly delayed financial reporting and releases (both annual and interim reports), and adversely impacted revenues recognition, net profit, borrowing terms including credit rates, and going concern. Finally, our findings also reveal a negative impact on most of the income statement and financial position rubrics. However, no significant impact is observed on off-balance-sheet assets and liabilities, owing to their uncertainties and contingencies.
  Keywords: COVID-19 pandemic; financial reporting delay; firm market value; financial position and net income impact; off-balance-sheet items; stakeholders' relationship; UAE.
  DOI: 10.1504/IJAAPE.2022.10047442
   
  
• Interdependence between the Moroccan and international stock markets before and during the Covid-19 crisis.  
  by Lhoucine Ben Hssain, Jamal Agouram, Ghizlane Lakhnati 
  Abstract: This paper examines the degree of interdependence between Moroccan and international stock markets (USA, Germany, and China). To test time-varying correlations, we used the dynamic conditional correlation model (DCC-GARCH). In addition, we used daily returns from stock market indices from January 2019 to January 2021, before and after the emergence of Covid-19. The study results indicate that the conditional correlations between Morocco and the selected markets are time-varying, with the existence of strong and weak correlations phases. We also noted that the Covid-19 crisis had an impact on the increased interdependence of the Moroccan stock market, with the US and German stock markets.
  Keywords: stock returns; DCC-GARCH model; Covid-19; interdependence.
  
  
• Corporate governance and financial stability of the English Premier League before and during COVID-19  
  by Stephen Young, Tony Abdoush 
  Abstract: This study aims to explore the relationship between corporate governance and the financial stability of football clubs in the English Premier League (EPL) before and during the COVID-19 pandemic. Using data collected manually from the annual reports over the period 2018-2020, the key findings have revealed that smaller boards, with fewer independent directors, more female directors, more directors with managerial ownership, and a Big Four audit firm, have helped football clubs to retain financial stability and improve firm performance during the pandemic. In particular, a diverse board with more female directors, and a Big Four audit firm, seem to yield the most significant results across all proxies of financial stability. Policymakers and regulators would benefit from these findings to promote governance arrangements with significant impact on the EPL financial stability, while investors and club owners should also consider adapting those specific practices to retain their clubs financial stability over the long run.
  Keywords: corporate governance; financial stability; football clubs; English Premier League; board of directors; board diversity; female directors; Big Four auditor; intangible assets; COVID-19 pandemic.
  
  
• Auditing in times of the coronavirus disease 2019 pandemic: qualitative research in the Tunisian context  
  by Feten Arfaoui, Ines Kammoun 
  Abstract: Based on an exploratory study, the paper tries to shed light on the impact of the coronavirus disease 2019 (Covid 19) pandemic on the process of the auditors' work. Specifically, by conducting semi-structured interviews with 17 authorised Tunisian auditors, we explore the effect of the pandemic on six key steps: identification and assessment of the risks of material misstatement; responses to the risk assessment; auditing of accounting estimates; auditor's responsibilities regarding going concerned and subsequent events; and the audit report. The results reveal that the pandemic disrupted audit work and that each step in the audit process was affected differently.
  Keywords: Covid 19; audit work; financial statements; audit planning; audit risk; audit report.
  
  
• The role of big data in public sector accounting and budgeting practices: evidence from a pandemic environment of an emerging economy  
  by Padmi Nagirikandalage, Arnaz Binsardi, Kaouther Kooli 
  Abstract: This paper investigates the actual and potential application of big data in the public sector accounting and budgeting practices in terms of enhancing accountability and openness in the public sector within the emerging economy of Sri Lanka during the COVID-19 pandemic. This research adopted hybrid ethnographic methodology by implementing data triangulation, where multiple datasets from various platforms were combined and analysed. The datasets were combined and analysed using thematic and summative content analyses. Big data use in the public sector could improve both accounting and budgeting practices in developing economies, especially when meeting challenges in a post-COVID-19 era. However, the political culture and the lack of awareness in big data utilisation have been barriers for big data applications. This research offers insights into policy reforms, especially concerning public sector accounting and budgeting practices, for the application of big data.
  Keywords: big data; public sector accounting; budgeting; accountability; publicness; emerging economy; hybrid ethnography.
  
  

Special Issue on: New Trends in Accounting and Auditing for SMEs

• Is solvency influencing EPS growth in Poland, Austria and Germany: a comparison study of markets with a similar bankruptcy law  
  by Agata Gniadkowska - Szymanska, Monika Bolek 
  Abstract: The goal of this paper is related to the comparison analysis of the companies listed on exchange markets in Poland, Austria and Germany under the issue of insolvency affected by financial liquidity that can influence the earnings per share growth in the light of the bankruptcy law. Financial liquidity is mentioned in the bankruptcy law as the phenomenon directly influencing the possible default of a business entity. The growth of earnings per share is considered as a measure of companies economic condition, also mentioned in the bankruptcy law, indicating the value creation for shareholders. To analyse the influence of financial liquidity on the growth of EPS, the linear and logit models are applied to compare the relationship between variables. The results showed that financial liquidity affects the earnings per share growth in Germany in a higher degree, while in Poland and Austria such an influence is much weaker.
  Keywords: financial liquidity; bankruptcy; the economic condition of companies.
  
  
• The relationship between organisational decentralisation, balanced scorecard and its perceived benefits in Moroccan SMEs  
  by Azzouz Elhamma 
  Abstract: Since the paper published by Kaplan and Norton (1992), the balanced scorecard (BSC) has been the subject of several research studies especially in large companies in the developed countries. However, the use and the benefits of this tool for strategic performance management in SMEs remains a field that has not yet been sufficiently explored, especially in the MENA region. In this context, this article aims to examine the BSC use and its perceived benefits according to the organisational decentralisation in Moroccan SMEs. The main results obtained, by using linear logistic regression and Student's t-test for a difference in means, show that 30% of the surveyed SMEs use the BSC. In addition, the study finds that in centralised SMEs, the impact of the BSC use on the three dimensions of the global firm's performance (competitiveness, profitability and productivity) is significant. However, in decentralised SMEs, this impact is not significant.
  Keywords: balanced scorecard; organisational decentralisation; competitiveness; profitability; productivity; SMEs; Morocco.
  
  
• Impact of agency costs on audit quality demand in initial public offerings  
  by Soumaya Ayedi Chabchoub 
  Abstract: This study aims at assessing the impact of agency costs on the demand for audit quality at the time of an Initial Public Offering (IPO) in an emerging market. It is based on IPOs of the Tunis Stock Exchange for the period 2005-2015. We used a logit estimation of our selected model. The results show the importance of the impact of incumbent-potential shareholder agency costs on audit quality demand. However, shareholder-manager agency costs didnt show any impact on the audit quality demand in an IPO context. The study is important because the Tunisian government has been encouraging Tunisian firms to list on the stock exchange by providing them with tax incentives but no particular restrictions have been placed on the IPO prospectus auditing. It is therefore an arbitration between higher and less audit quality demand made by the newly introduced firm in order to control its costs.
  Keywords: audit quality; initial public offering; agency costs; capital issue; Tunisian context.
  
  
• Does the international financial reporting standard for small and medium-sized entities suit private firms? Fieldwork case-study vignettes for Taiwan  
  by Yu-Lin Hsu, Gavin C. Reid 
  Abstract: This paper challenges policymakers claims that the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) is fit for purpose in private firms, using the mixed method and fieldwork evidence from Taiwanese companies. We exploit a unique research window during 2012-2016, when the Taiwanese accounting regulators considered adopting IFRS for SMEs, but finally chose a new hybrid standard: the Enterprise Accounting Standards (EAS), involving elements of IFRS and IFRS for SMEs. We find that companies attitudes towards IFRS for SMEs were strongly influenced by their plans and strategies (e.g., being acquired), and the accounting standard used by their parent companies. Hence, while introducing IFRS for SMEs or EAS seems a sound policy, accounting regulators should beware of their challenges to private firms (e.g., no ambitions to go public). Compliance costs could be attenuated by providing firms with clear accounting choices, whilst ensuring adequate financial reporting comparability.
  Keywords: IFRS for SMEs; private firms; case-studies; corporate group; GAAP; mixed method.
  
  
• IFRS experience, extent of disclosure, and perceived corruption: a study on African countries  
  by Fatma Ben Slama, Yasmin Amara 
  Abstract: This study investigates whether the quality of the accounting environment, through the IFRS experience of the country and the extent of disclosure, impacts the perception of less corruption after controlling for the legal, political, economic, fiscal and social environments. The study was conducted on a sample of 49 African countries over the period 2012-2017. The perception of less-corruption variable is based on the Transparency International (TI) index. We find strong evidence that the IFRS experience is associated with lower-perceived corruption, while the extent of disclosure does not play a significant role in limiting the perception of corruption. The level of legal enforcement, Gross Domestic Product (GDP) per capita democracy and education contribute to the perception of less public corruption. However, the tax rate favours the perception of greater corruption. This study contributes to the international standard-setting literature by testing the relevance of IFRS adoption over time in Africa.
  Keywords: IFRS experience; disclosure; perception of corruption; political system; economic development.
  
  
• EVALUATION OF FORECASTING ACCURACY OF AN EQUITY VALUATION MODEL: A CASE OF ZEE  
  by Amit Kumar, Shivani Chaudhry, Ameet Sao 
  Abstract: The art and science of managing money is a key to creation of wealth. Many people have no clue as to where should they park their funds. Investing can prove to be a very enriching and enjoyable experience if one sticks to certain principles and guidelines. This research is based on secondary data pulled out from Money Control website for ZEE Entertainment Enterprises Limited (ZEEL). The identification of target prices is the most important step and it involves precision in the price points that are forecast. The expected growth rate for the next year is figured out to forecast the financial statement for the next year. Regression analysis has been used to estimate growth rate. Regression analysis was done on the income data for the past years for the media entertainment company, which has already been mentioned above. The target prices have been identified after conducting the regression analysis and then forecasting the income statement, based on which the target prices are calculated. The target prices that are calculated will be meaningless unless and until they are analysed properly. By taking a careful look at the forecast prices and the prevailing prices, an investor can figure out whether the stock is under-priced or over-priced.
  Keywords: regression analysis; money control; growth rate; ZEE Entertainment Enterprises Limited; target price; forecast prices; under-priced; over-priced.
  DOI: 10.1504/IJAAPE.2022.10053240
   
  
• Exploring the evolvement of environmental management accounting practices for achieving SMEs sustainability in an emerging economy  
  by Padmi Nagirikandalage, Kaouther Kooli, Arnaz Binsardi 
  Abstract: It has been recognised that the information derived from Management Accounting Practices (MAPs) is invaluable for the strategic decision-making processes of businesses and thereby enables better environmental performance. Businesses have recognised MAPs as a viable approach to drive their businesses towards sustainability. Hence, this study was carried out in an emerging economy i.e. Sri Lanka, where the aim of this research is to explore the application of MAPs within SMEs for managing ecological issues. Two qualitative studies, netnography followed by semi-structured interviews, were implemented to obtain an in-depth perspective of the application of MAPs and their impact of managing ecological issues of SMEs. The findings imply that although MAPs assist SMEs for their internal control in terms of ecological costing, there remain some challenges for SMEs, especially regarding waste management, owing to other barriers.
  Keywords: environmental management accounting practices; SME; sustainability; emerging economy; netnography.
  
  

Special Issue on: Contemporary Issues in Accounting and Finance in the MENA Region

• Forward-Looking disclosure and short-term liabilities: evidence from Oman  
  by Hidaya Al Lawati, Khaled Hussainey 
  Abstract: The objective of the research was to examine whether forward-looking disclosure (FLD) in the narrative sections of the annual reports is associated with short-term liabilities (STLs). For this purpose, the content analysis method was conducted to measure the quality of FLD in annual report narratives. This research used a dataset consisting of 204 firm-year observations of Omani financial institutions listed on the Muscat Stock Exchange over the 2014-2019 period. This research examined the impact of FLD on STLs by using quantitative regression models. The findings revealed that FLD is positively related to the rise of short-term liabilities. This suggests that FLD reduces information asymmetry between companies and their stakeholders. Hence, these companies will be able to raise short-term finance. It is noteworthy that this is one of the early studies that address the link between FLD and short-term liabilities. As such, it provides significant contributions to corporate narrative disclosure studies.
  Keywords: short-term liabilities; forward-looking disclosure; content analysis; financial institutions; Oman.
  
  
• Financial contagion during the COVID-19 pandemic: the case of African countries  
  by Imen Zorgati, Faten Albouchi, Riadh Garfatta 
  Abstract: This study investigates pure financial contagion and interdependence as well as the nature of causal relationships between stock markets during the COVID-19 pandemic. We use the daily stock index series of China and African countries namely Tunisia, Egypt, Morocco, Uganda, Kenya, Ivory Coast, Nigeria, South Africa, and Zambia from January 1, 2016 to September 30, 2021.We adopt the cointegration and causality approaches to distinguish cases of pure contagion and interdependence by estimating VAR and VECM models. We find 11 cases of pure contagion, including seven cases in the short term and four cases in the long term. Moreover, we distinguish six cases of financial interdependence including two cases in the short term and four in the long term. These results provide several implications for investors who seek to diversify their portfolios internationally, and for portfolio managers to predict and minimize market risk. Our findings offer also guidance for regulators and policymakers.
  Keywords: COVID-19 pandemic; pure contagion; interdependence; cointegration; causality.
  
  
• Evaluation of non-performing financing of non-oil sectors: a case study of Bahraini Islamic banks  
  by Monsurat Ayojimi Salami, Adel Mohammed Serea, Harun Tanrivermis 
  Abstract: This study investigated the speed of adjustment of non-performing financing in several sectors in Bahrain. In this study, ANOVA, Johansen cointegration, and VEC models were used. The equality of mean test showed the mean difference between economically contributing financing and non-performing financing in Bahrain. The Johansen cointegration result revealed evidence of one (1) cointegration between each sector under consideration, lending support to the weak-form efficiency market hypothesis. The findings revealed that some non-performing financing in Bahraini non-oil sectors made greater efforts to re-establish equilibrium in the face of a short-run shock, whereas some others adjusted at a relatively slow pace. However, some non-performing financing showed no indication of the rate of adjustment. These findings were further illustrated graphically using the Impulse response function graph. The findings suggested that the Bahrain Islamic finance industry should reduce non-performing financing even further because most of the speeds of adjustment are either slow or non-existent.
  Keywords: evaluation; non-performing financing; non-oil sectors; Bahrain; Islamic banks.
  
  
• Competition, stability and the efficiency channel in the Tunisian banking system  
  by Abderazak Bakhouche 
  Abstract: Tunisia has expanded the entry of foreign capital and introduced Basel-based reforms to reinforce bank efficiency, competition and stability. Although significant progress has been made, the upsurge in NPLs and vulnerability to adverse economic conditions remain serious factors menacing bank stability. This work examines the competition-stability nexus in Tunisian banking during 2005-20 and establishes whether cost efficiency affects this nexus. The results reveal that competition reduces stability, supporting the competitionfragility thesis with an insignificant efficiency channel. Fragility heightens as banks become larger, with a neutral role for liquidity or diversification. Inflation, GDP growth and the rule of law influence bank stability. Government, foreign, and private banks do not differ in stability, suggesting that non-government ownership may operate with goals other than stability-enhancing. There appears a case to review the reform programmes and re-formulate their goals and procedures.
  Keywords: bank competition; cost efficiency; stability; Lerner index; market power: Tunisia; Covid 19; Arab spring.
  
  
• The effect of financial inclusion on poverty alleviation and economic growth: a view from an emerging market.  
  by Zakaria Boulanouar, Osama Badr, Khaled Sayed Ahmed 
  Abstract: This study investigates the impact of financial inclusion (FI) on Egypt's economic growth and poverty reduction. A summary of the extensive FI literature review is conducted, including Egypt's experience. Using 21 years' worth of data from the WDI database, the relationship between FI, economic growth, and poverty reduction is estimated using the LS and ARDL regression models. Our results show that greater FI and government spending growth lead to more economic growth. However, an increase in trade openness reduces the rate of economic growth, indicating that trade openness happens in the direction of consumer imports. Moreover, improving FI leads to a higher poverty rate and a greater concentration of income reduces the poverty rate.
  Keywords: financial inclusion; poverty reduction; economic growth; Egypt; emerging market.
  
  
• Determinants of national IFRS adoption: evidence from the Middle East and North Africa region  
  by Azzouz Elhamma 
  Abstract: This article aims to examine the determinants of the national international of financial reporting standards (IFRS) adoption in 23 Middle East and North Africa (MENA) countries. By using the neo-institutional theory, we have chosen to use the three forms of isomorphic pressures (coercive, mimetic and normative isomorphism). The results obtained support that mimetic and normative isomorphism, measured respectively by the foreign trade and the educational level, influence significantly the decision of national IFRS adoption in the MENA region. Concerning the coercive pressure, the Reports on the Observance of Standards and Codes (ROSC)-Accounting and Auditing (AA) influence the national IFRS adoption in the Middle Eastern countries, but not in the North African countries. Unlike previous studies, this research has two characteristics. First, it covers almost all countries in the large MENA region with 23 countries. Second, in this research, we conducted a comparative study between North African and Middle Eastern countries.
  Keywords: national IFRS adoption; MENA; neo-institutional theory; coercive isomorphism; mimetic isomorphism; normative isomorphism.
  
  
• Is financial information still useful in issuing stock recommendations? Evidence from the Tunisian financial analysts  
  by Imen Beldi, Randa Maghraoui, Sarra Elleuch Hamza 
  Abstract: This study aims to determine the relevance of different information types in explaining financial analysts recommendations concerning Tunisian listed firms. Three hypotheses are proposed and evaluated through a content analysis approach and a logistic regression analysis. Despite the growing importance of non-financial information in recent years, our findings show that financial information has not lost its usefulness. More precisely, buy and hold recommendations refer to the two types of information (leverage, dividend payout, earnings, and market position). In contrast, sell recommendations seem to be particularly associated with the financial one (dividend payout, earnings). As an economic crisis mark the period under study, these results suggest that analysts often use non-financial information to justify producing an unexpected favourable recommendation in a context of distress. They imply that firms, especially those relatively unattractive to investors, can bet on this type of information to hide their gloomy reality. Moreover, the analysts optimism should be taken into account by investors when making their investment decisions. Finally, accounting policymakers have to improve more and more accounting standards to preserve financial information usefulness.
  Keywords: usefulness; financial information; non-financial information; financial analysts’ recommendations; emerging market; MENA countries; analysts’ optimism.
  
  
• The effect of the COVID-19 pandemic on the performance of Turkish banks: a comparative panel data analysis  
  by Omar Kachkar, William Bwando 
  Abstract: This study investigates the impact of the COVID-19 pandemic on the performance of conventional and participation banks in Turkey. Panel data with random effects was the main analysis methodology adopted by the study. The data of ten banks was analysed within the range of 2015-2021. The results of the combined analyses could not establish any impact of the pandemic on the profitability of both groups of banks. The same result is also observed when the analysis is conducted on both groups separately. In contrast, a negative impact on the operational efficiency of banks was observed when the analysis was conducted on the two sets of the banks combined. Interestingly, the results suggest that the pandemic had a negative impact on the operational efficiency of participation banks but not on conventional banks when the analysis was conducted on the two sets of the banks separately.
  Keywords: COVID-19; profitability; operational efficiency; Islamic banks; Turkey.
  
  
• Operating performance of initial public offerings: empirical evidence from Oman  
  by Ananda S, Roslin Lazarus 
  Abstract: The objective of this study is to examine the operating performance of companies as they move from private to public on Muscat Stock Exchange (MSX). The sample data were collected from the database of MSX. Three regression models were developed to measure the association between the three dependent variables of the operating performance of IPO companies and ten independent variables that could be associated with a consequential change in operating performance. The return on equity (ROE), return on sales (ROS) and return on assets (ROA) were used as dependent profitability measures to examine the operating performance of twelve companies that went public in MSX between 2007 until 2018. Regression model results revealed that there exists a significant impact of more than one identified independent variable on companies operating performance as measured by companies ROE, ROS and ROA. Even though the post-IPO period registered a decline in operating profit, the paired sample results revealed no significant difference in the operating performance of sample companies during the pre-and post-IPO periods. The findings of this study contribute a new insight for the literature in the middle east region to understand the factors influencing the operating performance of companies as they move from private to public on the Muscat Stock Exchange (MSX). Therefore, the findings may be useful to policymakers, corporate decision-makers financial institutions, investors, and researchers.
  Keywords: initial public offerings; IPOs; operating performance; ownership retention; Muscat Stock Exchange; Oman.
  
  

Special Issue on: Accounting, Auditing, Governance and Performance Evaluation in Times of Crisis

• Are environmentally friendly firms more vulnerable to the Russia-Ukraine crisis?  
  by Wajih Abbassi, Sabri Boubaker, Riadh Manita, Dharen Kumar Pandey 
  Abstract: This paper applies an event study approach to assess the effect of the Russia-Ukraine crisis on environmentally friendly firms. Using a sample of 1206 firms from the S&P Global 1200 index covered from 6 January 2021, to 8 March 2022, we find that, ceteris paribus, cumulative abnormal returns are significantly related to the environment score. While the environmental scores positively affect the pre-event window CARs, firms with higher environmental scores are more detrimentally affected during the Russia-Ukraine war. This can be attributed to the expected increase in post-war compliance costs for these firms, given the detrimental effects of the war on the environment. This study contributes to the literature by showing that firms with high environmental scores are not necessarily more resilient to war shock events than those with environmental concerns and by providing empirical evidence regarding firm-specific characteristics that drive event-induced returns, indicating that risks may be diversified based on firm and industry characteristics. This study has policy implications because, while it shows that a high environmental score does not necessarily make a firm more resilient, it sheds light on firm-specific characteristics that drive war event-induced returns.
  Keywords: Russia-Ukraine crisis; environmental score; event study; market model; book-to-market.
  
  
• To what extent did the Covid-19 pandemic affect corporate risk disclosure? The case of United Arab Emirates listed companies  
  by Rihab Grassa, Ahmad Al Mheriei, Khaled Jamal Al Ali, Saeed Hareb, Mohammad Jamal Alsadah, Nasser Hassan 
  Abstract: This study assesses the effect of the Covid-19 pandemic on corporate risk disclosure (RD) for the listed companies in the United Arab Emirates (UAE) and investigates its main determinants. We apply a narrative risk technique on 78 listed companies observed for the years 2019 (before the pandemic) and 2020 (covid-19 pandemic year), as well as a regression model. The paper findings provide the following evidence. First, RD has increased considerably from 2019 (pre-pandemic year) to 2020 (pandemic year). The highest increase of RD is reported for logistics and transportation sectors, then manufacturing sector then financial sector. The lowest change of RD is observed for the energy sector then for the telecommunication sector. Second, most of the RD changes are observed for pandemic-related words, as it increased considerably in 2020. Third, RD increased with the increase of firm profitability. Fourth, aged firms and foreign firms have increased corporate RD during the pandemic. Fifth, audit quality has a positive impact on the increase of RD. Sixth, the decrease of ROA is significantly correlated to the Covid-19 related information disclosure. The research findings provide several practical implications. First, this paper sheds the light on the importance of audit quality to improve firm transparency in an emerging market, which would be relevant for investors and regulators. Second, the findings can be useful for the regulators to have a better understanding of the determinants of firms providing generic or meaningful Covid-19 information. In addition, the findings of this research would be informative for the International Accounting Standards Board's (IASB) ongoing consideration of risk reporting in the crisis period.
  Keywords: risk disclosure; Covid-19; UAE; audit quality; foreign ownership.
  
  
• Contents and determinants of corporate social responsibility reporting in the context of the Arab Spring crisis  
  by Esam Emad Ghassab, Carol Tilt, Kathy Rao 
  Abstract: The objectives of this research are to investigate the nature and extent of Corporate Social Responsibility (CSR) disclosure before and after the Arab Spring crisis and to examine the impact of certain firm characteristics on CSR disclosure. Content analysis was used to determine the nature and extent of CSR disclosure in the annual reports of Jordanian-listed companies on the Amman Stock Exchange (ASE) from 2009 to 2016. The results reveal that CSR disclosure has increased significantly in the first year following the Arab Spring crisis and there is evidence of some stakeholder management by firms. Regression results showed that firm size, profitability, financial leverage and audit firm size are positively and significantly associated with the disclosure of CSR, after controlling for pre- and post-Arab Spring crisis period. The findings are of interest to corporate managers, regulatory bodies and accounting standard setters.
  Keywords: Arab spring crisis; Jordan; CSR disclosure; transparency; accountability; stakeholders; firm characteristics.