Forthcoming and Online First Articles

International Journal of Accounting, Auditing and Performance Evaluation

International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE)

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International Journal of Accounting, Auditing and Performance Evaluation (40 papers in press)

Regular Issues

  • Disclosure of forward-looking information: does overlapping audit committee membership matter?   Order a copy of this article
    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.

  • Changes in the value relevance of energy industries accounting information: the impact of the shale revolution   Order a copy of this article
    by Gee Jung Kwon 
    Abstract: This study investigates the value-relevant factors of companies in the global energy industry from the point of view of accounting information, and investigates how the value relevance of accounting factors is changing as a result of the shale revolution that began in 2012. The empirical analysis of this study shows that the value relevance of R&D expenditures has declined dramatically since 2012, when shale gas extraction began in the USA. It also shows that in the energy industry, operating cash flow and company size are not important value-related factors in increasing corporate value. Conversely, operating income is the most important value-relevant variable for corporate value since 2010. The results also suggest that accounting information from the energy equipment and services industry group are more useful than information about firms in the oil gas consumable fuel industry. This study shows that there is a change in the value relevance of firm value variables in the energy industry after the shale revolution. The study are expected to be useful for investors and stakeholders in making investment decisions in the global energy industry.
    Keywords: shale revolution; value relevance; accounting information; energy industry.

  • The challenges of implementing enterprise risk management: a study of manufacturing companies in the Tehran Stock Exchange   Order a copy of this article
    by Setareh Fasihi, Seyed Ali Hosseini, Nelson Waweru, Ali Rahmani 
    Abstract: Implementing enterprise risk management (ERM) is one of the important solutions in reducing the uncertainty and survival of companies. The ERM is very important owing to the varying conditions of Iran's business environment as well as the role of manufacturing companies in its prosperity and economic growth. Therefore, the present study aims to explore the challenges of implementing ERM in the manufacturing companies listed in the Tehran Stock Exchange. In the present study, semi-structured interviews with the experts in the field of ERM among selected Iranian manufacturing companies and other ERM experts in the pharmaceutical, automotive, and petrochemical industries are used. The identified challenges related to implementing ERM include intra-organisational and extra-organisational challenges. Intra-organisational challenges include risk governance, risk culture, enterprise risk management process, and infrastructures. Besides, extra-organisational challenges include the role of government and policymakers, political and economic conditions, international restrictions, and the lack of a competitive environment (exclusiveness).
    Keywords: enterprise risk management; Iranian manufacturing companies; contingency theory; risk governance; risk culture; institutional shareholder; international restrictions.

  • The effectiveness of government internal auditor: evidence from Indonesia   Order a copy of this article
    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.

  • Government investments commitment to internal audit requirements The case of Jordan   Order a copy of this article
    by Mohammad Aladwan, Omar Alhwatmeh 
    Abstract: The study aims to examine the commitment of government companies to international internal auditing standards. The study employs both qualitative and quantitative research methods in addressing the problem. To achieve the study objective, the researchers distributed a questionnaire to 627 employees of 156 Jordanian companies that have government contribution, 582 (92%) of the questionnaires were returned. As a mean for analysing the study data; the researchers used the mean, standard deviation, percentages, and T-test. The general findings revealed that Jordanian companies with government contributions do not apply international internal auditing standards; instead they commit to practices that are enacted by government regulations but, unfortunately, these practices are found not fully similar to international internal auditing standards. Therefore, the results showed weak commitment from the sampled companies to such necessary standards. In the light of the study results, the researchers give a number of recommendations that are necessary to achieve effective internal auditing standards.
    Keywords: internal audit; internal audit standards; owned companies and government contributions; Jordan.

  • The role of internal control weakness in debt selection   Order a copy of this article
    by Bambi Hora, Edward Walker, Yinghong Zhang 
    Abstract: We investigate the impact of internal control weakness (ICW) on debt selection. We categorise debt structure in two ways: 1) bank debt, bonds, program debt, private placements, convertible debt, and other debts; and 2) secured, senior unsecured, and subordinated debts. We hypothesise that the existence of ICWs reduces accounting information quality and increases firm risk and default risk. Therefore, bank debt is borrowed to provide better monitoring. Additionally, the presence of ICW is also positively associated with the usage of secured debts, which are collateralised by assets. Our findings are consistent with our predictions. Our findings suggest that ICW information provides incremental value to creditors and that changes in debt selection are one economic consequence of companies reporting ICWs.
    Keywords: debt structure; internal control weakness; secured debt; senior unsecured debt; subordinated debt; bank debt; bonds; program debt; private placement; convertible debt.

  • Does foreign ownership affect audit committee adoption? Evidence from Brazilian companies   Order a copy of this article
    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.

  • Enterprise risk management disclosure and creative accounting practices: evidence from Nigeria   Order a copy of this article
    by Olayinka Erin, Paul Olojede 
    Abstract: This study investigates the impact of Enterprise Risk Management (ERM) disclosure on creative accounting practices of listed firms in Nigeria for the period of 2013-2018. With a sample of 120 firms in Nigeria, we drew insights from the contingency theory. The study used panel data with fixed effects regression analysis to analyse the dataset. The findings empirically revealed that ERM disclosure has a significant impact on the reduction of creative accounting practices. Our findings call for clear responsibility and a strong drive for ERM disclosure by corporate institutions in Nigeria and other emerging economies. The empirical approach used in this study emphasises the need for corporate organisations to embrace ERM practices and to integrate ERM information into their business strategies and operations. Our findings contribute to the growing literature in the area of ERM disclosure, creative accounting practices, business ethics, and corporate transparency in Nigeria and, by extension, other Sub-Saharan African countries.
    Keywords: board risk committee; cash based earnings management; creative accounting practices; contingency theory; chief risk officer; enterprise risk management.

  • Earnings management and environmental performance from a political cost perspective: an Indonesian case   Order a copy of this article
    by Alex Johanes Simamora 
    Abstract: This study aims to examine the moderating role of industry sensitivity, profitability, and size of companies on the effect of environmental performance on earnings management. The samples are manufacturing companies listed on the Indonesian Stock Exchange and PROPER assessment 2015-2019. Based on the year-fixed effect regression, companies with lower environmental performance are more likely to manage earnings downward if companies are included in an environmentally sensitive industry and have higher profitability. This indicates that, to avoid the political cost of lower environmental performance, companies that are in an environmentally sensitive industry and have higher profitability tend to manage earnings downward to reduce societal, regulators, and environmental activist attention and pressure. Surprisingly, companies with lower environmental performance are more likely to manage earnings downward for smaller companies than bigger ones. This indicates that smaller companies with lower environmental performance have less market pressure to fulfil earnings targets and tend to manage earnings downward.
    Keywords: earnings management; environmental performance; company’s size; industry sensitivity; political cost; profitability.

  • The moderating effect of internal audit quality on the relationship between working capital management and firm performance: evidence from the United Arab Emirates   Order a copy of this article
    by Magdi El-Bannany, Mohamad Ali Abdul Hamid, Mohamed Salem M.S. Bayou, Walaa Wahid Elkelish, Alhashmi Aboubaker Lasyoud, Sunday Simon, Khaled Hussainey 
    Abstract: The study investigates the moderating effect of internal audit quality (IAQ) on the relationship between working capital management (WCM) and firm performance, and examines the quadratic relationship between WCM and firm performance. Using a sample of 31 large firms listed on the UAE stock exchange from 2007 to 2017, the study finds that days sales outstanding, days inventory outstanding, and cash conversion efficiency have a positive relationship with firm performance while days payment outstanding and cash conversion cycle have a negative relationship with firm performance. The results also reveal that IAQ significantly moderates the observed relationship between WCM and firm performance. Further analysis revealed that the relationship between WCM and firm performance in UAE is quadratic or non-linear. These findings have theoretical and practical implications, as they suggest that policies for improving working capital metrics should also consider internal audit recommendations in response to firm performance. The reason is that a high-IAQ provides insight that will guide WCM decision making. This is in addition to maintaining an optimal level of investment in WCM.
    Keywords: working capital management; firm performance; audit quality; UAE.

  • Does the market react to mandating ESG disclosure? A regression discontinuity based evidence   Order a copy of this article
    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   Order a copy of this article
    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.

  • Internal auditors without proficiency: a giraffe without a neck   Order a copy of this article
    by Hassan Kehinde Oyewumi, Che-Ahmad Ayoib, Oluwatoyin Muse Johnson Popoola 
    Abstract: This study examines the proficiency of internal auditors in three tertiary institutions. It evaluates three proficiency dimensions - knowledge, experience, and professional skill- and their impact on the overall proficiency of internal auditors. The study employs a quantitative approach, a cross-sectional design, and a survey method. It obtained data through questionnaires from 263 respondents (i.e., accountants and internal auditors) about their perception of internal auditors proficiency. IBM SPSS version 23 and PLS-SEM were used to analyse the data for model robustness. The study reveals that experience and professional skill have a positive significant influence on the proficiency of internal auditors. The study has practical implications as the internal auditors, management of tertiary institutions, Councils of tertiary institutions, professional accounting and auditing bodies, and government can use it in their decision making.
    Keywords: proficiency; knowledge; experience; professional skill; tertiary institutions; internal auditor.

  • Examining the impact of top-management teams on performance measurement system design: a social network perspective   Order a copy of this article
    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.

  • Board gender diversity and real earnings management: the moderating role of auditor reputation   Order a copy of this article
    by Sameh Halaoua, Sonia Boukattaya 
    Abstract: The present work aimed to shed light on the effect of board gender diversity (BGD) on real earnings management as well as the moderating role of auditor reputation in the association between BGD and real earnings management, using panel data of 1162 French non-financial firm-year observations from the SBF120 index during the period 2005-2019. Our findings show that BGD is negatively related to real earnings management. Furthermore, we found that this relationship is more prominent in firms with higher auditor reputation mainly because highly reputable auditors aim to preserve their image and are more likely to detect earnings management activities.
    Keywords: women on board of directors; real earnings management; auditor reputation; corporate governance.

  • Internal auditors' selection for sustainable competitive advantage   Order a copy of this article
    by Azleen Binti Ilias, Nasrudin Baidi, Erlane K. Ghani 
    Abstract: This study aimed to investigate the factors in selecting internal auditors in public listed companies (PLCs) and non-public listed companies (Non-PLCs) and the role of internal auditors. Specifically, it aimed to look at the perceptions of specific coursework and topics, students experiential activities, and student credentials and certifications in selecting university graduates as internal auditors. In addition, this study examined the benefits of the Certified Internal Auditor (CIA) designation for future internal auditors and the soft skills needed for the early-career of internal auditors. It found that the important factors in the selection include the course of internal audit, internship, and internal auditing experience. These factors together demonstrated communication and leadership skills. Additionally, practising internal auditors viewed the importance of the internal audit function (IAF) and foresee that the benefits of the CIA qualification would provide career advantages between PLCs and Non-PLCs and the position of internal auditors. This study could help the Institute of Internal Auditors Malaysia (IIAM) develop competent internal auditors to ensure a sustainable competitive advantage.
    Keywords: internal auditing; selection decision; early-career internal auditors; certification; skill development.

  • The impact of audit committee characteristics on auditor remuneration: UK evidence   Order a copy of this article
    by Jihad Al-Okaily 
    Abstract: The 2008 global financial crisis has added fuel to the heated debate on whether audit committees are effective in maintaining a transparent external audit process. This study contributes to the literature through examining the impact of audit committee characteristics on audit fees and non-audit fees during the 2008-2010 period where widespread concerns were raised about the role of external auditors, and the crucial role that audit committees could play in safeguarding audit quality. The findings reveal that the external audit oversight role of audit committees have positive impact on enhancing audit quality through demanding wider audit scope from external auditors. However, non-audit fees are positively related to audit committee meetings, suggesting that the committee supports the simultaneous provision of audit services and non-audit services to facilitate a beneficial knowledge spill-over between the two services which in turn results in a better audit quality. These findings have implications for researchers as well as policy makers. Researchers would explore multi-theoretical approaches which could better explain organizational complexities and their environmental circumstances. Policy makers would consider the results while setting new corporate governance reform recommendations.
    Keywords: audit committees; audit fees; auditor remuneration; financial crisis; non-audit fees.

  • Knowledge mapping in the area of corporate social responsibility and financial performance: a bibliometric and visualisation analysis   Order a copy of this article
    by Harish Kumar Bhatter, Biswajit Prasad Chhatoi 
    Abstract: The increasing number of laws towards Corporate Social Responsibility (CSR) around the globe have led to the involvement of CSR in Financial Performance (FP) in research as well as business domain. To analyse and visualise the knowledge map of CSR related to FP, this study collects bibliometric information from the Web of Science database. Further, the study used bibliometric and network visualisation methods to analyse the bibliometric information through VOSviewer software. Analysis of 1752 documents reveals that CSR and FP constitute an emerging research topic, and a substantial amount of research is performed by developed countries. The study also found that environmental management, gender diversity, board composition, board of directors, data envelopment analysis, meta-analysis, family firms, and information asymmetry are the principal areas of study. This paper makes a novel contribution to the literature by conducting the first bibliometric and visualisation analysis in CSR and FP.
    Keywords: bibliometric analysis; corporate social responsibility; financial performance; knowledge map; VOSviewer; co-citation analysis; co-occurrence analysis.

  • The use and determinants of online financial reports in Europe: an empirical investigation of listed firms   Order a copy of this article
    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.

  • Investigating the effect of goods and service tax on operational performance, cost efficiency and profit margins of MSMEs   Order a copy of this article
    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.

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   Order a copy of this article
    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   Order a copy of this article
    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.   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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.

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   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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.

    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   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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.

  • Determinants of national IFRS adoption: evidence from the Middle East and North Africa region   Order a copy of this article
    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   Order a copy of this article
    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   Order a copy of this article
    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.

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

  • Are environmentally friendly firms more vulnerable to the Russia-Ukraine crisis?   Order a copy of this article
    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.