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International Journal of Accounting and Finance (4 papers in press)
Impression management using graphical resources in Brazilian company reports by Keylla Silva, Fernanda Rodrigues, CESAR SILVA Abstract: The aim of this study is to investigate the evidence of impression management in the form of selectivity or improved presentation in the graphs and charts used by companies. We analysed the reports of 180 Brazilian companies from the period between 1997 and 2014. The variables tested were: company size, profitability, age, variation in results, report size, and publication period. The results indicated that there is a significantly positive relationship between financial performance and the total amount of graphs and charts, graphs and charts with key financial information (net income, net revenue and dividends) and those improving or enhancing presentation. This is a sign of impression management in the reports analysed. We found a relationship with the companys age and that in the initial years of the analysis period the companies used fewer graphs and charts to disclose financial information in their reports. Keywords: management report; impression management; graphical resources; selectivity; improved presentation; enhancement; Brazil; key financial information; financial performance; manipulation.
Explaining the functional orientation of the budget: a survey of Swedish organisations by Sven-Olof Collin, Timurs Umans, Kristian Lindqvist, Kristian Tjörnebrant Abstract: The paper presents a congruence model where factors belonging to the environment, to the corporation, and to the management control system of the corporation are expected to influence the functional emphasis put on the budget, i.e. the functions of coordination, responsibility and evaluation. Through a test performed on 111 Swedish corporations, we find indications that the budget is very much alive; it appears to focus more on dealing with external situations than with internal characteristics; and it appears to be part of the formalisation of the organisation. We draw these conclusions based on our findings that suggest that the budget is being used mainly as a coordinative device, and less as an instrument for evaluating actions. Keywords: budget; Sweden; functional emphasis; congruence model.
Flipping activity in the Malaysian IPO market: a new explanation from the winners curse perspective by Norliza Che Yahya, Ruzita Abdul Rahim, Rasidah Mohd Rashid Abstract: This study examines the influence of the winners' curse phenomenon on flipping activity through a winners curse measurement proposed in Amihud et al. (2003). The study defines winners curse using allocation rate (ALLOCj), which is as the natural log of the reciprocal of investor demand or oversubscription ratio. In this view, the presence of winners curse in an IPO market leads to high flipping activities, indicating that new IPO subscribers are not willing to retain the allocated IPOs for the longer term. However, from another view, where high ALLOCj could also reflect IPOs with low demand, the immediate trading activity by the new subscribers is not possible, thus low flipping activities are produced. Using a sample of 381 IPOs issued in Bursa Malaysia from January 2000 until December 2013, cross-sectional multiple regression analyses results show that ALLOCj relates significantly and negatively to flipping activity. The significant relationship supports the view that uninformed investors are more likely to win big IPOs which are not demanded by the informed investors. Therefore, the lower demanded IPOs produce low flipping activities. Keywords: flipping activity; winners’ curse; initial public offerings; Malaysian IPO market.
Valuation of a risk-averse investor under incomplete information by Kazuhiro Takino, Yoshikazu Ishinagi Abstract: In this study, we provide a firm valuation rule under incomplete information. Incomplete information here means that investors have not been informed of the true expected return of business cash flows. We describe incomplete information using the filtering theory. We evaluate the firm value under incomplete information with a utility-based valuation rule. The utility-based rule reflects the risk aversion of investors in firm value. We also verify the relation between the quality of information and firm value using sensitivity analysis. This examination indirectly relates the quality of information and cost of capital for the firm. Furthermore, we examine the firm value using the Discount Cash Flow (DCF) method as an example of risk-neutral valuation approaches. By comparing the results of DCF valuation, we describe how a risk-averse investor evaluates the firm under the incomplete information environment. Keywords: valuation; utility indifference pricing; incomplete information.