International Journal of Accounting, Auditing and Performance Evaluation (35 papers in press)

Regular Issues

• Open Access

  The moderate role of national culture and prosperity index on the effectiveness of the fraud triangle to prevent financial statement fraud: a cross-country meta-analysis approach ( Free Full-text Access )

  by Milad Soltani, Alexios Kythreotis, Arash Roshanpoor 
  Abstract: This research article aims to achieve three objectives, identify effective fraud triangle risk factors for detecting financial statement fraud (FSF), assess the role of country characteristics in detecting FSF risk factors, and evaluate variations in fraud scores between countries with comparable cultural and prosperity levels. Using a meta-analysis approach following PRISMA guidelines, the study uncovers effective proxies for fraud triangle risk factors and highlights the significant role of a nation's characteristics in determining FSF risks. The findings contribute to the behavioral forensics literature by providing a comprehensive assessment of reputable studies, offering insights into the moderate effect of countries' specific features on FSF occurrence, and clustering countries with similar attributes to analyze differences in fraud scores. This research advances our understanding of FSF detection and prevention and can be used to develop tailored financial fraud prediction models and strategies on a global scale.
  Keywords: fraud triangle; SAS No.99; meta-analysis; Hofstede's cultural dimension; prosperity index.
  DOI: 10.1504/IJAAPE.2024.10061969
   
  

• Open Access

  M&A disclosure post-global financial crisis: the influence of family ownership ( Free Full-text Access )

  by Cristina Florio, Francesca Rossignoli 
  Abstract: This study investigates whether acquirers provide higher-quality disclosures for mergers and acquisitions (M&As) after the global financial crisis (GFC) compared to before, in an effort to restore investors’ trust and secure access to credit in a country, Italy, that lengthy recovered from the severe GFC. By employing a comprehensive mandatory disclosure index, we conduct empirical research on a sample of M&As spanning the pre-GFC (20062008) and post-GFC (20152017) periods in Italy. Our findings show heightened M&A disclosure quality post-GFC compared to the pre-crisis period, with the improvement being significantly more pronounced in family-owned acquirers than in non-family ones. This outcome remains robust after matching family and non-family observations through propensity-score matching. The study enriches extant knowledge on disclosure quality and offers practical implications to regulators, standard setters, and investors who may evaluate different responses to the GFC in a crucial area of disclosure.
  Keywords: disclosure quality; mandatory disclosure; M&A; business combinations; IFRS 3; goodwill; family firms; ownership; global financial crisis; Italy.
  DOI: 10.1504/IJAAPE.2024.10063370
   
  
• 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.
  
  
• 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
   
  
• Internal control quality and audit fees: does the CIO matter?  
  by Jean Bradley, Harrison Liu, Jennifer Yin 
  Abstract: This study investigates the influence of the Chief Information Officer (CIO) on internal control over financial reporting (ICFR) and audit fees. We find that firms with CIOs in the top management team (TMT) are significantly less likely to receive an adverse Section 404 report. We also find that audit fees are lower for firms with high-status CIOs in industries with low IT spending. In high IT-intensity industries, audit fees are higher, consistent with the higher risk associated with IT spending. These results provide evidence that, while CIOs in the TMT are associated with better overall internal control quality, the promise of lower audit fees through sophisticated IT system controls has not been fully realized.
  Keywords: chief information officer; internal control quality; audit fees.
  
  
• Organisational justice, mediated by affective commitment, and time budget pressure effect to the millennial auditor turnover intention  
  by Andrianantenaina Hajanirina, Aldelia Jerri Ko, Mila Austria Reyes 
  Abstract: This research aims to investigate the relationships between distributive justice, procedural justice, affective commitment, and time budget pressure and the millennial auditor turnover intentions within public accounting firms. The rate of millennial quitting is higher than the firm had ever seen just a decade after the millennials entered the workforce. The research described work-life balance and job flexibility as key factors influencing millennial decisions on turnover. The researcher used SEM and PLS. The sample was taken from external auditors from Big Four and non-Big Four public accounting firm in Jakarta, Indonesia. Results show that there is a full mediation between distributive justice and procedural justice to turnover intention through the mediating variable of affective commitment. Time budget pressure besides was found to positively affect turnover intention. The contribution is to emphasise and draw conclusions on the impact of time budget pressures on public accounting firms.
  Keywords: millennial; auditor turnover intention; organisational justice; affective commitment; time budget pressure; public accounting firms.
  DOI: 10.1504/IJAAPE.2023.10059157
   
  
• The impact of risk-taking on performance of Islamic and conventional banks in Qatar, Saudi Arabia and UAE  
  by Henda El Amri, Taher Hamza 
  Abstract: This paper investigates the effect of risk-taking on performance for Islamic and conventional banks in Qatar, Saudi Arabia and the United Arab Emirates during the period 2003-2014. First, our findings reveal a slight outperformance of Islamic banks compared to their conventional counterparts, especially during the Subprime crisis. Second, Islamic banks exhibit lower credit, liquidity and idiosyncratic risks. However, conventional banks have the least average of systematic risk. Third, we underline a positive effect of capital adequacy on bank performance. Nonetheless, this performance is affected negatively by credit, idiosyncratic and systematic risks. Furthermore, the insolvency and liquidity risk have no significant impact on bank performance. Moreover, the findings show a positive effect of GDP per capita and of inflation but a negative effect of bank size on bank profitability. Finally, the results show that the subprime financial crisis did not significantly affect banks’ performance in Qatar, Saudi Arabia and UAE.
  Keywords: risk-taking; bank profitability; Islamic banks; conventional banks.
  DOI: 10.1504/IJAAPE.2023.10059208
   
  
• Successive economic cycles and the Fisher effect  
  by Khushboo Agnihotri, Sachin Srivastava, Omdeep Gupta 
  Abstract: The current research is based on the primary notion of testing Fisher's equation in real scenarios across successive economic cycles in primarily two economies: US and India. The modus operandi of the research has been to conduct hypothesis testing for validating whether there exists a strong relationship between nominal and real interest rates with inflation rate in each economy. Analysis of other variables such as GDP and GDP per capita growth rate complement the essence of research. The findings of the research have been mixed in nature where the Fisher equation holds good in US but not in India. The economic interpretation of the obtained results is that the Central bank of India does not exercise adjusting nominal interest rates for accommodating the expected inflation rate on a consistent basis, implying that there is an explicit impact of inflation over real interest rates in the economy.
  Keywords: Fisher effect; economic cycles; interest rates; inflation; GDP.
  DOI: 10.1504/IJAAPE.2023.10059241
   
  
• Audit team competence, auditor motivation and audit quality threatening behaviour  
  by Alice Annelin 
  Abstract: This study examines the association between audit team competence and individual auditor motivation with audit quality threatening behaviour (AQTB). The eight AQTB can influence audit quality and audit errors. Determinants of auditor behaviour are thus considered important. Practicing audit teams at a Big-4 audit firm took part in a questionnaire survey to provide their perceptions of their team experience on one specific engagement. Analysis shows that team competence and individual intrinsic motivation is negatively related to AQTB, while extrinsic motivation is positively related to AQTB. Also, intrinsic and extrinsic individual motivation moderates the relation between team competence and AQTB. Thus, individual auditors can influence the team’s AQTB depending on how they are motivated, which indicates interventions can be used to decrease AQTB. Contributions include evidence about audit competence at a team level (team competence) and individual motivation, determinants that are of concern for regulators, clients and audit firms.
  Keywords: audit team; team competence; intrinsic/extrinsic motivation; audit quality threatening behaviour.
  DOI: 10.1504/IJAAPE.2023.10059538
   
  
• Corporate social responsibility, internal control and accounting conservatism: evidence from Tehran stock exchange  
  by Mohammad Mahmoodi 
  Abstract: The present study has investigated if the internal control and corporate social responsibility affects accounting conservatism in listed companies of Tehran stock exchange. In order to find the answer of designed questions, the data of 125 companies of Tehran stock exchange during 10 years from the beginning of 2011 to the end of 2020 were extracted and statistical test were performed on them. The method of present research is descriptive-correlation and its design is experimental and uses an Ex-post fact research design. In order to test research hypotheses, multivariate linear regression has been used which is based on panel data and a combination of cross-sectional and time series used statistical methods and econometrics to investigate the effect of the variables on the dependent variable. Findings of research showed that there is a significant and negative relation between corporate social responsibilities and accounting conservatism, also the internal control and CSR do not effect on accounting conservatism.
  Keywords: corporate social responsibility; internal control; accounting conservatism.
  DOI: 10.1504/IJAAPE.2023.10059620
   
  
• The cost implications of ESG reporting: an examination of audit fees in the UK  
  by Ahmed Moussa 
  Abstract: This study investigates the relationship amongst the levels of ESG-related information disclosed by companies and their impact on the cost of auditing for non-financial corporations included in the FTSE All Share in the UK from 2010 to 2021. A robust and statistically significant positive relationship was identified amongst ESG disclosure and the cost of auditing. Additionally, larger and more profitable firms tended to pay higher audit fees. Conversely, board size, independent board, leverage, and audit committee non-executives did not have any noteworthy impact on audit fees. Audit committee independence was discovered to exert a noteworthy and adverse impact on audit fees in all regression models, including OLS, random effect, and Tobit regression. In addition, the study found that internal governance moderates the relationship amongst ESG reporting and audit cost. Specifically, better internal governance reduces the positive relation between ESG reporting and audit fees in all regression models, including OLS,
  Keywords: ESG reporting; audit fees; internal governance; resource-based view; institutional theory; principal component analysis.
  DOI: 10.1504/IJAAPE.2023.10059685
   
  
• Economic policy uncertainty and earnings management: evidence from China  
  by Sang Ho Kim, Yohan An 
  Abstract: This study investigates the effects of economic policy uncertainty (EPU) on earnings management (EM) practices in Chinese firms. The extant literature failed to provide a consistent prediction on the EPU-EM relationship. One line of research suggests that managers are likely to improve the financial reporting quality, while another line of research indicates that managers may deteriorate the reporting quality by increasing EM when EPU increases. We argue that one of the causes of these conflicting results is that extant literature has not fully considered the institutional features of each country. Therefore, EPU-EM relationship should be tested in line with country specific institutional environment. We posit that the underdeveloped institutional environment and less efficient information system in Chinese capital market encourage managers to engage in more EM. The findings showed that Chinese firms were more likely to manipulate earnings using both accrual-based earnings management (AM) and real activity-based earnings management (RM) when EPU rises. They also tend to respond heterogeneously to the changes in EPU depending on their ownership and industry types.
  Keywords: economic policy uncertainty; earnings management; China; accrual-based earnings management; real activity-based earnings management.
  DOI: 10.1504/IJAAPE.2023.10059753
   
  
• Twenty years of research by Professor Khaled Hussainey: a bio-bibliometric analysis  
  by Walid Simmou, Ibrahim Sameer, Fatma Ahmed, Anas Hattabou, Samira Simmou 
  Abstract: This paper presents a unique contribution to financial and accounting research through a retrospective overview of 20 years of research by Professor Khaled Hussainey. Using a bio-bibliometric analysis, this research identified co-authors, journals, institutions, and countries associated with Professor Khaled Hussainey based on his 128 peer-reviewed papers published between January 2003 and July 2022 using the Scopus database. The thematic analysis method established major research clusters related to his contributions. During 20 years of research, Professor Khaled Hussainey produced 128 papers, totalling 2922 citations, corresponding to an average of 22.82 citations per publication. His accounting and financial management research has earned him the position of specialist subject editor for some of the most prestigious accounting and finance journals. The typical research clusters to which Professor Khaled Hussainey has contributed include: corporate disclosure (cluster 1), financial and accounting strategies (cluster 2), strategy and management practices (cluster 3), and Islamic finance (cluster 4). The findings will benefit academics by providing general insights into accounting and financial literature and critical information about Professor Khaled Hussainey that will guide future collaboration and research.
  Keywords: bibliometric analysis; Khaled Hussainey; corporate disclosure; corporate governance; thematic analysis.
  DOI: 10.1504/IJAAPE.2023.10060023
   
  
• Strategic manoeuvres in the political arena: exploring the nexus of political cost and earnings management: a review  
  by Kazi Abul Bashar Muhammad Afzal Hossain, Mahmoud Elmarzouky, George Giannopoulos 
  Abstract: This paper aims to review the literature on political costs and earnings management. An exhaustive search of available academic data sources identified 23 relevant articles published in various renowned journals between 1991 and 2022. The overall findings of this review suggest a list of sources of political cost and indicate a significant impact on firms' reported earnings. This study also indicates other factors like environmental disclosure, corporate governance, and political connections as moderating factors for this relationship. Our study is significant for future researchers, policymakers, potential investors and other stakeholders to understand and predict the implications of firms' behaviour and responses against any future changes in policies or regulations.
  Keywords: political cost; earnings management; environmental performance; corporate governance; systematic review.
  DOI: 10.1504/IJAAPE.2023.10060152
   
  
• Tax avoidance, state control and firm financial constraints: empirical evidence from a developing country  
  by Mouna B.E.N. Rejeb, Nadya Ouali 
  Abstract: State controlled firms enjoy tax preferential treatments that may increase tax avoidance profit proportional to its cost. Bearing on this, the present study examines how state control affects tax avoidance practices and whether financial constraints moderate this relationship. Based on a sample of 248 Tunisian firms over the 20072022 period, we employ a GLS randomeffect model with robust estimates, clustered by firm using different measures of tax avoidance and state control. The empirical analysis indicates that state control correlates negatively with tax avoidance practices. More important, the findings show that managers of state-controlled firms are not motivated to reduce tax expenses when they face financial constraints even in crisis period. These managers are constrained to protect government revenues useful to achieve socio-political objectives to the detriment of the firm performance.
  Keywords: financial constraints; state control; tax avoidance; developing countries.
  DOI: 10.1504/IJAAPE.2023.10060503
   
  
• Machine learning approach to identify performance audit topics for different government sectors  
  by Alaa Aljanaby, Ahmad Abdel-Hafez, Yue Xu, Tim Rose 
  Abstract: A government performance audit is an independent evaluation of a government entity's activities and operations aimed at improving its efficiency, effectiveness, and accountability. Audit offices are frequently facing the challenge of selecting an audit topic for different government sectors that justifies the use of public money to conduct the performance audit. Text mining techniques have been rarely mentioned in association with selecting performance audit topics in the literature. In this work, we identify potential performance audit topics using topic modelling, an unsupervised machine learning approach. Topic modelling has been employed to create a demonstration system aimed at showcasing the utility of text mining tools in identifying potential audit topics. The outcome of this study suggests that incorporating text mining in the stage of identifying performance audit topics will streamline the topic selection process and decrease the amount of time required for manual information gathering at the outset.
  Keywords: topic modelling; performance audit; text mining; audit office; audit topics; topic ranking; topic filtering; machine learning.
  DOI: 10.1504/IJAAPE.2024.10060764
   
  
• The global credit sector in the shadow of COVID19: financial assessment  
  by Sami Al Kharusi, Alya Al Foori, Sree Rama Murthy 
  Abstract: This research paper delves into the global financial performance of the credit sector across various regions during the worldwide COVID19 pandemic. By analysing financial ratios from 2480 banks across 12 different regions, the study employs discriminant analysis to ascertain whether there were disparities in bank performance before the pandemic (pre-COVID19), during the first phase of COVID19 (December 2020), and during the second phase of COVID19 (June 2021). The research uses aggregated financial ratios from the balance sheet and income statement. The findings reveal that bank performance in 2020 declined compared with 2019. However, the assessment becomes more intricate when contrasting 2020 with 2021. Notably, profit growth, revenue growth, return on equity, and return on assets all experienced significant decreases in 2020 when compared with the preceding year, 2019. Interestingly, the negative trends observed in revenue growth and profit growth during 2020 were reversed substantially in 2021, showcasing a remarkable shift.
  Keywords: world; financial performance; COVID19; banks; global outbreak; ratio analysis; banking sector.
  DOI: 10.1504/IJAAPE.2024.10060908
   
  
• IFRS 7/9 determinants of financial instrument disclosure in emerging markets and the moderating effect of foreign ownership: evidence from Nigeria  
  by Obiajulu Chibuzo Okeke, Mary-Fidelis Chidoziem Abiahu, Grace O. Ogundajo 
  Abstract: The study sought to investigate the firm specific characteristics that can influence the disclosure of financial instrument information, and the influence of foreign ownership. Data was obtained from sampled listed manufacturing firms in Nigeria for the period between 2011 to 2020. The findings revealed that foreign firms in Nigeria disclosed more financial instrument information compared to the local firms. Audit quality, foreign ownership and firm growth revealed a positive effect on financial instrument disclosure, whereas firm size and profitability revealed a negative effect on financial instrument disclosure. Furthermore, the empirical evidence revealed that foreign ownership moderates the relationship between audit quality, firm size and financial instrument information disclosure. Based on the empirical findings, we recommend to managers of manufacturing firms in Nigeria to endeavor to employ the services of the big four audit firms and to have more foreign investors as they will drive the disclosure of financial instrument information
  Keywords: Financial Instrument; Firm Characteristics; IFRS 7; IFRS 9; Manufacturing Companies; Nigeria.
  DOI: 10.1504/IJAAPE.2024.10060977
   
  
• What causes forward-looking information disclosure in a dynamic setting? Evidence from Malaysia, a developing country  
  by Imad Muftah, Yuserrie Zainuddin 
  Abstract: This paper examined the factors influencing forward-looking information disclosure (FLID), including corporate governance, International Financial Reporting Standards (IFRS), and earnings management, while controlling for firm-specific variables. Endogeneity issues have plagued previous similar studies, so this study utilised a robust dynamic estimation approach (i.e., Sys-GMM) to address these concerns. Analysing a large dataset of listed companies in Malaysia over nine years, the study found that earnings management and IFRS, along with firm size, were significant drivers of FLID. Accounting for various sources of endogeneity, the study discovered that board size and independence had a negative impact on FLID. The research's novelty lies in its dynamic approach to investigating the determinants of FLID, making it valuable for regulators and policymakers interested in improving information flow in annual reports. The study suggests that non-IFRS-adopting countries may benefit from moving towards IFRS to enhance financial disclosure quality.
  Keywords: corporate disclosure; forward-looking information; corporate governance; IFRS; earnings management; endogeneity; system GMM; Malaysia.
  DOI: 10.1504/IJAAPE.2024.10061387
   
  
• Tax planning of corporate assessees: a bibliometric study and future research direction  
  by Arjuna Kumar Maharana, Priyabrata Panda 
  Abstract: The paper aims to provide an extensive idea regarding the studies conducted in the field of corporate tax planning through bibliometric analysis and provides future direction to researchers who are interested in conducting research in this field. We have collected the data from the Scopus database for this study, and after filtering the data, we have analysed a few questions and explored some good results. We have used Biblioshiny software (through RStudio). The paper explored the most cited papers, the most impactful authors, the most relevant sources and the most productive countries. The study also shows the country collaboration, authors' co-citation network and keyword co-occurrence network. Other important aspects of this paper are the thematic map and thematic evolution map, which provide a good understanding of the studies in the area of tax planning. And finally, the future research direction will help the researcher choose the right way.
  Keywords: tax planning; tax avoidance; corporate assessee; bibliometric analysis.
  DOI: 10.1504/IJAAPE.2024.10061926
   
  
• Sustainable development goals: evidence from technology and telecommunication sectors from the UK and Australia  
  by Madiha Sarwar, Nadia Gulko, Nicola Wood 
  Abstract: The Sustainable Development Goals (SDGs) formulated by the UN are based on the concept of a shared plan to achieve a more sustainable future for all. This poses a significant challenge for companies to address sustainability issues within their corporate structure and policies. Purpose of our paper is to examine disclosure on the SDGs in corporate reports and on websites of FTSE100 and ASX100 companies in the UK and Australia’s Technology and Telecommunication sectors. The results of content analysis of nineteen reports and twelve websites show that although most companies in the sample indicate their commitment to the SDGs, the effectiveness of SDGs reporting can be enhanced. The findings reveal SDGs disclosure in UK companies has a different focus than in Australian companies. It is also noted that the industry characteristics influence SDGs reporting. We offer several implications for policymakers, management, stakeholders, and academics, and highlight opportunities for future research.
  Keywords: sustainable development goals reporting; technology and telecommunication sector; content analysis; annual and sustainability reports; UK; Australia.
  DOI: 10.1504/IJAAPE.2024.10062413
   
  
• Detection of earnings manipulation in financial reports: a data-driven approach  
  by D. Divya, Vivek M. Bhasi, O.N. Arunkumar 
  Abstract: Earnings manipulation attracts attention from both from industry and academia as detection of earnings manipulation helps them to invest wisely rather than based on falsified financial statements. This paper discusses a process through which earnings manipulators can be identified. This can help shareholders to detect companies who have made modifications to their financial statements. Earlier researchers developed many mathematical models to identify earnings manipulators. However, their works require an in-depth understanding of financial ratios and accounting principles. The advancement of data-driven algorithms has now brought comparable machine learning detection techniques into the picture, wherein data scientists can use historical data to detect earnings manipulators. This paper discusses the use of an Artificial Neural Network (ANN) for detecting manipulations in the dataset.
  Keywords: earnings manipulation; data analytics; neural network.
  DOI: 10.1504/IJAAPE.2024.10062836
   
  
• Audit quality and firm performance: evidence from SAARC nations  
  by Niva Kalita, Reshma Tiwari 
  Abstract: This paper provides preliminary evidence of the impact of audit quality on firm performance in the context of South East Asian Association of Regional Co-operation (SAARC) nations. As far as our knowledge transcends, no cross-country empirical work in the SAARC countries ties audit quality with firm performance. According to their market value, the top fifty non-financial listed companies from Bangladesh, India, Pakistan and Sri Lanka are chosen as the sample for the period of 20122021. The system generalised method of moment is used to analyse the dynamic panel data. For robustness, generalised estimating equation population-averaged model is employed. The findings suggest a positively insignificant association between auditor size and firm performance. However, a significant positive relationship is established between audit fees and ROA. Furthermore, the analysis suggests a non-linear relationship between audit fee and Tobins Q, implying that audit fee has a diminishing marginal impact on market value.
  Keywords: Audit quality; audit fee; big 4; firm performance; SAARC.
  DOI: 10.1504/IJAAPE.2024.10063029
   
  
• Mitigating climate change towards sustainability: a natural-resource-based view of the influence of taxation policy change on energy companies  
  by Thi Nguyen, David Floyd, Fadi Alkaraan, Mizan Rahman 
  Abstract: Rooted in Knightian uncertainty caused by many extreme situations and natural-resource-based view, this papers sheds lights on corporate opportunistic behaviours, and the potential effects of increasing taxes on energy companies of the UK government to mitigate climate change and also considers the effects of an energy price CAP for both consumers and businesses. It starts by looking into the theory of increasing tax’s benefits and drawbacks, then analyses the demand and supply of energy in the UK before assessing the consequences. It also assesses how the energy cap affects consumers and businesses before finishing by looking into the UK’s current actions on sustainability. The result shows that raising the windfall tax on energy firms funds the British government to protect struggling households and cover its own debt. It also encourages these firms to produce more gas and oil, which helps the government in this net-zero transition and gain energy security. However, the obvious downside is that it would prevent energy firms from investing more in renewable energy, which is a threat to climate change targets.
  Keywords: government subsidy; taxation; renewable energy; energy crisis; sustainability; net zero; climate change.
  DOI: 10.1504/IJAAPE.2024.10063030
   
  
• Impact of hyperinflation on financial statements and taxation: a case of Lebanon  
  by Jacques Hendieh, Robert Poulton, Umair Riaz 
  Abstract: Since 2019, the Lebanese currency has continued to devalue against the US dollar. We aim to discuss two improvements in the present study, the impact of using a fixed exchange rate on import taxes during hyperinflation in a developing country. We also tested whether IAS29 will result in more reliable, relevant financial statements. We collected annual reports from the Lebanese Central Bank and Procter and Gamble. Two techniques were used to test the hypotheses: a descriptive approach and a simple regression model. We find that using a market exchange rate instead of a fixed exchange rate is better for improving import tax collections, especially in hyperinflation times, when governments must spend more to reduce their expenditures to limit the impact of inflation. Our results also suggest that using IAS29 results in more reliable and relevant financial statements that improve the decision-making process for the stakeholders and the company’s survival chances.
  Keywords: hyperinflation; IAS29; taxation; financial results; financial statements; developing countries; import tax.
  DOI: 10.1504/IJAAPE.2024.10063099
   
  
• IFRS convergence and earnings management in India: a mixed method approach  
  by Yasser Barghathi, Poorna Sriram, Naimat U. Khan, Umair Riaz 
  Abstract: TThis paper uses a mixed method to address the impact of International Financial Reporting Standards (IFRS) convergence on earnings management in India. We examine a sample of 70 Indian listed companies with net worth exceeding 500 crore INR that adopted IND(AS) in Phase 1 in 2016. The Modified Jones Model is employed to assess earnings management over four yearstwo years pre- and post-IND(AS) adoption. Additionally, we conducted six semi-structured interviews with auditors and accountants. Contrary to the hypothesis of improved reporting quality through IFRS harmonisation and reduced principal-principal agency conflict, our findings reveal increased earnings management practices post-IND(AS) adoption. The complementary quantitative and qualitative results highlight Indias power imbalance, enabling large firms with tight controls to influence reporting practices, potentially indicating principal-principal conflicts between majority and minority shareholders. This research suggests implementing additional measures to safeguard minority shareholders interests from expropriation by the majority.
  Keywords: IFRS; earnings management; reporting quality; convergence; corporate governance.
  DOI: 10.1504/IJAAPE.2024.10063276
   
  

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: 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.