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International Journal of Managerial and Financial Accounting

International Journal of Managerial and Financial Accounting (IJMFA)

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International Journal of Managerial and Financial Accounting (20 papers in press)

Regular Issues

  • Board Gender Diversity and Firm Risk-Taking: The Moderating Role of Board Size   Order a copy of this article
    by Hussain Muhammad, Stefania Migliori 
    Abstract: This paper provides new insights into the relationship between board gender diversity and firm risk-taking by examining whether board size (BS) alters the influence of gender diversity on firm risk-taking. This study employs a quantitative method with a sample of 192 non-financial listed firms in Italy from 2016 to 2020. Based on our results, board gender diversity does not exert a consistent influence on firm risk-taking. Instead, its effect is contingent upon BS. Given that larger and smaller boards differ in building and employing their strategic decisions. We find that smaller boards are willing to ratify risky policy choices aligned with the shareholder’s interest. Notwithstanding, we failed to find any significant gender diversity’s effect on risk-taking in firms with smaller boards. On the other hand, larger boards are found to be less discrete and more inclined to form middle-ground, moderate, and safe decisions to reduce firm risk-taking. Our results reveal that larger boards accentuate the risk reduction effect of gender diversity, showing that Italian non-financial firms are better off with larger and gender-diverse boards. Larger boards with more female members enhance problem-solving and market insights, facilitate adherence to the government or regulatory policies and help reduce the firm’s risk.
    Keywords: board gender diversity; board size; BS; firm risk-taking; agency theory; resource dependency theory; non-financial firms; Italy.
    DOI: 10.1504/IJMFA.2023.10049185
     
  • Intellectual capital and firms’ performance: The role of institutional ownership   Order a copy of this article
    by Ranjit Tiwari 
    Abstract: Prior studies have looked at how intellectual capital affects firm performance without taking institutional ownership into account. This study aims to investigate the potential moderating effects of institutional ownership on the association between intellectual capital and firm performance. The results of the panel generalised method of moments (GMM) using data for 767 manufacturing firms from 2010 to 2019 showed that the two components of intellectual capital that consistently affect firm performance are the human capital coefficient and structural capital coefficient. In addition, institutional ownership is seen to moderate the effect of the human capital coefficient on firm performance rather than having a direct impact on it. Furthermore, the influence of the human capital coefficient on firm performance is moderated by the promoter institutional ownership.
    Keywords: intellectual capital; institutional ownership; firm performance; interaction effects; generalised method of moment; GMM.
    DOI: 10.1504/IJMFA.2023.10051308
     
  • National Culture and Earnings Management in Emerging Markets: The Role of IFRS Mandatory Adoption   Order a copy of this article
    by Dante Viana Jr., Isabel Lourenço, Marilia Ohlson, Gerlando Lima 
    Abstract: This study investigates the association between national culture and earnings management in emerging markets and analyses the role of International Financial Reporting Standards (IFRS) mandatory adoption in dampening the influence of national culture on earnings management. Based on a sample of 12,209 firm-year observations from 14 emerging markets, and using several proxies for both accrual-based earnings management (AEM) and real earnings management (REM), we provide empirical evidence that firms from countries with higher levels of uncertainty avoidance, power distance, and long-term orientation, and firms from countries with lower levels of indulgence and masculinity, are associated with higher levels of earnings management. Furthermore, the empirical findings suggest that the IFRS mandatory adoption (associated with a better financial reporting system) moderates the association between cultural factors and earnings management by dampening the influence of national culture on either AEM or REM.
    Keywords: national culture; earnings management; emerging countries; International Financial Reporting Standards; IFRS; accrual-based earnings management; AEM; real earnings management; REM.
    DOI: 10.1504/IJMFA.2023.10051444
     
  • Adoption of International Financial Reporting Standards and its effect on quality of Financial Reporting - A Bibliometric Study   Order a copy of this article
    by Reena Kumari, G. Naresh 
    Abstract: International Financial Reporting Standards (IFRS) research productivity have been examined in this study using bibliometric analysis on 403 articles from Scopus database covering period of 2005 -2021. This study gives holistic view of IFRS research journey. Bibliometrix (RStudio) and VOSviewer software are used for the analysis. It examines the extant global literature on IFRS with co-citation analysis, publication trend analysis, keyword analysis to identify the influential research network, intellectual structure and gaps in this area. The major key themes which emerged based on keywords ' frequency and analysis are 'corporate governance ', 'accounting quality ', 'earnings management ', 'earnings quality ' and 'audit quality '. IFRS adoption led to better financial reporting quality and reduced information asymmetry. IFRS implementation largely depends on the strength of law enforcement in nations. It gives a comprehensive view of IFRS research to the policymakers, regulators and new researchers and further guides them to identify relevant areas which need further investigation.
    Keywords: International Financial Reporting Standards; IFRS; financial reporting; accounting quality; GAAP; accounting standards; bibliometric analysis; VOSViewer; RStudio.
    DOI: 10.1504/IJMFA.2023.10051608
     
  • The impact of terrorism and institutional quality on Cost of Debt: An Analysis on Developing Countries.   Order a copy of this article
    by Issa Dawd, Lanouar Charfeddine 
    Abstract: This study examines the impact of terrorism and institutional quality on the cost of debt. Considering all observed incidents in 35 countries over the period 1998-2019. Our main finding is that terrorist activity has a positive and significant effect on the cost of debt. We also find that improved institutional quality help to reduce the cost of debt. Our analysis also suggests that the response of the cost of debt to shocks on terrorism and quality institutions lasts between one and eight years. However, there is evidence of a bidirectional Granger causality between the cost of debt and the global terrorism index and between institutional quality and the cost of debt in the case of the global terrorism index. The policy implications of the empirical findings have been discussed.
    Keywords: terrorism impact; institutional quality; cost of debt; VAR Analysis; developing countries.
    DOI: 10.1504/IJMFA.2023.10051649
     
  • Financial Statement Fraud: US and Chinese Case Studies   Order a copy of this article
    by Md Jahidur Rahman, Hu Jiaying, Md Moazzem Hossain, Dr. Shyamapada Biswas, Moutushi Tanha, Tarek Rana 
    Abstract: This research aims to compare financial statement fraud in China and the USA. This research conducted data analyses from 20 companies between 2016 and 2020, specifically, ten US companies and ten Chinese companies. The ten companies have financial disclosure problems and are limited liability companies. The findings of the study show that senior management, CPAs, and auditors are mainly responsible for the financial statement fraud in both countries. In addition, weak internal controls and irresponsibility are the motivations or factors that facilitate financial statement fraud. Consistent with prior literature, the senior management and other individuals are more responsible for the financial statement fraud in the US companies compared with in the Chinese companies. Moreover, the hiring of independent directors with local political connections to prevent financial statement fraud may not be applicable to US companies. Findings provide a better understanding between the financial statement fraud and the various factors connected to the financial statement fraud in China and the USA. The results have theoretical, managerial, and practical implications to the regulators and policy makers.
    Keywords: perpetrators; methods; motivations and factors; detection; outcomes; prevent; financial statement fraud.
    DOI: 10.1504/IJMFA.2023.10051650
     
  • Impacts of Profitability and Growth on Stock Returns of the listed Manufacturing Companies at Dhaka Stock Exchange in Bangladesh   Order a copy of this article
    by Maisha Marium Rahim, Md. Sharif Hassan, Muhammad Mohiuddin 
    Abstract: The study aimed to examine the impact of profitability and growth on the adjusted stock return of the listed manufacturing companies at the Dhaka stock exchange, Bangladesh. The study included 198 manufacturing companies operating in 14 sectors. The combination of cross-sectional and time-series data has constituted panel data. We hypothesise the positive and significant relationship between profitability and growth, and stock returns, pooled OLS multiple regression model, fixed effect regression model, and random effect regression model has been developed. The findings showed that all the independent variables except for the operating profit margin (OPM) positively impact the stock return. The variables did not influence the investor's stock investment decision, except for the net profit growth (NPG) measure. The positive connection between other profitability ratios and the stock return has not turned out to be robust and significant mainly because of the speculative and non-analytical investment decision-making by individual-level investors.
    Keywords: gross profit margin; GPM; operating profit margin; OPM; net profit margin; NPM; ROA; ROE; gross profit growth; GPG.
    DOI: 10.1504/IJMFA.2023.10051720
     
  • MESDAQ and ACE Markets through the Lens of Performance: Has the 2009 Transformation Paid Off?   Order a copy of this article
    by Harkati Rafik, Fekri Shawtari, Abdelkader Laallam 
    Abstract: On 29th July 2009, Bursa Malaysia underwent a new board structure, the main and second boards were merged as one unified board called the main market, whereas MESDAQ market had a name change as ACE market, whereby firms other than technology-based are permitted to list on ACE market. This study seeks to investigate the effectiveness of this restructuring in enhancing the performance of the ACE market firms and alleviating liquidity constraints. The study employs unconsolidated data of 126 companies operating in ACE market for the period 20042018, generalised method of moments (GMM) and ratios analysis techniques are employed in the investigation. The findings revealed that, it is size, equity, and sales growth that mainly drive performance in the ACE market. Leverage is to be determined with caution based on the core business of the firm and the sort of investment. While financial constraints have been alleviated, further actions are recommended to enhance this market as performance post-2009 transformation is not up to expectations. Setting the optimal capital structure and choosing between long-term and short-term financing should be the primary concerns of the company.
    Keywords: ACE market; MESDAQ market; performance; ratio analysis; generalised method of moments; GMM; 2009 transformation.
    DOI: 10.1504/IJMFA.2023.10051775
     
  • Does Policy Uncertainty Affect Earnings Quality? Evidence from China   Order a copy of this article
    by Sang Ho Kim, Yohan An 
    Abstract: This study investigates the effects of policy uncertainty (PU) on earnings quality in Chinese firms. It is known that high uncertainty in economic policy has a detrimental effect on the overall economy and affects individual firms’ investment decisions as well as cost of capital. Although a number of studies have examined the relationship between financial reporting quality and PU, most findings concern advanced economies or international settings, providing little insight for emerging markets. This study demonstrates that earnings quality deteriorates as PU increases in China because managers have an incentive to intervene in the financial reporting process to alleviate the adverse impact driven by a rise in PU. In addition, we found that Chinese firms are likely to respond heterogeneously to changes in PU, depending on their ownership and industry types.
    Keywords: policy uncertainty; earnings quality; China; discretionary accruals; earning management.
    DOI: 10.1504/IJMFA.2024.10053049
     
  • Capital structure, voluntary corporate governance and credit ratings: Evidence from non-listed SMEs   Order a copy of this article
    by Apostolos Dasilas 
    Abstract: This study investigates the capital structure of 26,335 Greek non-listed SMEs during the period 2014-2018 employing a gamut of firm-specific, credit ratings and corporate governance variables. Employing both static and dynamic panel data regression models, the results show that the short-term debt ratio is negatively (positively) related with profitability, tangibility and growth (firm size). The long-term ratio is positively (negatively) associated with profitability, tangibility, firm age (firm size). Board size exerts a positive effect on the long-term debt ratio, while CEO gender is negatively related to the long-term debt ratio. Finally, higher credit ratings are associated with more debt levels.
    Keywords: capital structure; credit ratings; corporate governance; SMEs.
    DOI: 10.1504/IJMFA.2024.10053100
     
  • Pay Ratio and Operational Efficiency   Order a copy of this article
    by Kwangjoo Koo 
    Abstract: Using a comprehensive US sample over the period 1995-2010, we examine the effects of CEO-to-employee pay ratios on operational efficiency. We have found evidence that the pay ratio is negatively associated with firm efficiency. This means that employees perceive higher pay ratios as an inequitable outcome that discourages their collaborations and leads to dissatisfaction with their working environments. We conduct a battery of tests to alleviate the endogenous nature of pay ratios and a variety of other sensitivity tests. We also find that the association is more pronounced when collaborative working environments are better, as in cases of: 1) firms with lower default risk; 2) firms with lower financial analysts’ attention; 3) firms with stronger less severe risk-aversion. Our paper provides significant evidence for the ongoing policy debate over pay inequality on firm operations.
    Keywords: pay ratio; social comparison; tournament theory; firm efficiency.
    DOI: 10.1504/IJMFA.2024.10053205
     
  • The effects of fiscal decentralisation on local finances after the territorial reform of local government in 2015 in Albania.
    by Arben Hysi, Elenica Pjero, Grigor Dede, Ashutosh Kolte 
    Abstract: The local government, as the government closest to the community, aims to meet the needs that are the most useful to the community. Local government itself is essentially the result of the decentralisation of central government through the division of the power horizon, depending on the form of government in a political society. The level of efficiency and effectiveness in services and in meeting the needs of the community depends on the functioning deriving from decentralisation in the political, administrative and financial directions. Different countries have a strong tradition in the organisation and functioning of local governments. Citizen sensitivity makes many local administrative and financial decision-making problems for local issues more democratic for direct democracy. Like all Eastern European countries, Albania, after the system changed in 1990, implemented two reforms to regulate the effectiveness and quality of local services for the community.
    Keywords: local finances; fiscal decentralisation; effects of decentralization; territorial reform; local government; Albania.

  • The Impact of Climate Change on Dividend Policy in the UK Stock Market
    by Fakhrul Hasan 
    Abstract: In this paper we ascertain whether or not below average temperature increases have a positive effect on dividend policy. Using FTSE-350 (UK) data from between 1990 and 2019 we documented those seasonal temperatures that had a significant and methodical effect on the UK dividend pay-out policy, both at the cumulative level and across a wide cross-section of economic sectors. We used dividend changes and average temperature (as a proxy for climate change). Our findings show that the effect is strong for winter, summer and autumn; an increase of below average temperatures has positive effects on dividend pay-out policy. This study also looks at industry dynamics to show whether particular industries have any effect on particular sessions on UK dividend policy. The results show that three sessions have a significant effect on dividend pay-out policy and stock market returns and one session has no effect.
    Keywords: climate change; temperature; dividend changes; panel data.
    DOI: 10.1504/IJMFA.2024.10053784
     
  • Exploring the impact of sustainability disclosure on the cost of equity capital in the hospitality and tourism industry   Order a copy of this article
    by Antonio Salvi, Felice Petruzzella, Nicola Raimo, Filippo Vitolla 
    Abstract: Environmental, social and governance (ESG) disclosure has gained increasing importance in recent years due to its ability to provide an overview of sustainable business behaviour. However, despite the attention paid by investors and stakeholders to sustainability information, the hospitality and tourism (H&T) industry is not characterised by a propensity towards ESG disclosure. This circumstance may be related to the lack of awareness regarding the benefits associated with a wide dissemination of ESG information, resulting from the limited presence of academic contributions on the topic. This study aims to fill this important gap by analysing the impact of ESG disclosure on the cost of equity capital in the H&T industry. The regression analysis, conducted on a sample of 1,750 firm-year observations from 2010 to 2019, demonstrates the existence of a negative relationship between ESG disclosure and the cost of equity capital.
    Keywords: sustainability disclosure; ESG disclosure; hospitality and tourism industry; cost of equity capital; COEC.
    DOI: 10.1504/IJMFA.2024.10053522
     
  • Exploring the disclosure quality of Integrated Reporting in India   Order a copy of this article
    by Suman Devarapalli, Lalita Mohan Mohapatra, Ammar Jreisat, Sasikanta Tripathy, Somar Al-mohamad 
    Abstract: Information is one of the elementary and important tools assessed by the corporate stakeholders for strong decision making. Further, providing accurate, transparent, and concise report is always a challenging task. In this context, this groundwork explores the advancement of integrated reporting (IR) in India. Moreover, the exploration also focuses on the level of disclosure and quality of reporting through individual parameters of IR, i.e., four guiding principles (GP), eight content elements (CE), and six capitals of the IR system. The analysis selected annual reports of 81 Indian companies for 2020 and 2021 and examined 162 integrated annual reports by employing a scoring system for converting qualitative information in the integrated reports to quantitative data. The study constructed the capital disclosure index (CDI) and integrated reporting index (IRI) to measure the overall quality of IR. Wilcoxon signed ranks test, the sign test and paired sample t-test were employed to capture the trend of the IR. This study found that quality of IRI improved in 2021 compared to 2020; however the individual items did not show much variation. This research has practical implications for the top management, market regulators and policy makers.
    Keywords: disclosure quality; integrated reporting; capital disclosure index; CDI; integrated reporting index; IRI; India.
    DOI: 10.1504/IJMFA.2024.10053705
     
  • Effect of corporate social responsibility on the stock price synchronicity in China   Order a copy of this article
    by Md Jahidur Rahman, Zeren Xu 
    Abstract: The purpose of this paper is to discover the possible relationship incurred between corporate social responsibility (CSR) and stock price synchronicity in China. A regression model is constructed for the empirical test on a sample of 9,787 firm-year observations from Chinese A-listed firms from 2011 to 2020. Results show a positive relationship between CSR and stock synchronicity, which is robust to alternative variables and have no multi-collinearity problem. This study can guide investors and managers in socially responsible investment decision making in the Chinese stock market.
    Keywords: corporate social responsibility; CSR; stock price synchronicity; China.
    DOI: 10.1504/IJMFA.2024.10053706
     
  • The causes and effects of IFRS adoption speed: diffusion of innovation theory perspective   Order a copy of this article
    by Ibrahim Khalifa Elmghaamez 
    Abstract: This study investigates the drivers and economic benefits of adopting international financial reporting standards (IFRS) by applying the classification proposed by the diffusion of innovation theory. By employing multiple linear regression and a series of cumulative logistic regression for a large sample spanning 1995-2014, this paper shows that countries with Anglo-Saxon culture and substantial protection rights tend to accelerate their IFRS adoption decision to maintain their legal legitimacy. This paper also indicates that countries with lower governance indicators are more prone to hasten their IFRS adoption to improve the quality of their political systems. This research reports that countries with higher educational attainment and literacy rates but lower education quality levels are more likely to hasten their IFRS adoption to enhance their education systems quality. Results indicate a positive relationship between four economic indicators (i.e., economic growth, FDI, GDP and interest rates) and the rapid IFRS adoption speed.
    Keywords: IFRS adoption speed; diffusion of innovation theory; causes; economic benefits.
    DOI: 10.1504/IJMFA.2023.10052297
     
  • Impact of corporate governance and audit quality on financial performance: listed vs. unlisted Tunisian companies   Order a copy of this article
    by Ines Kateb, Olfa Nafti, Nesrine Ben Salah 
    Abstract: The paper aims to analyse the impact of governance mechanisms and external audit quality on the financial performance of listed and unlisted Tunisian companies in a post-revolutionary context. Using panel data econometric model, the results show that board size affects differently the performance of listed and unlisted firms. Institutional ownership affects positively listed firm performance, whereas the variables related to the audit affect only unlisted firm performance. These findings lead us to confirm that in a post-revolutionary context, listed companies have resorted to debt to mitigate losses incurred by economic instability. The political uncertainties and the fragility of the judicial system that characterised Tunisia during the period of democratic transition have negatively affected investors' confidence in auditors. Consequently, Tunisian listed companies substitute external audit quality with other governance mechanisms like board size and institutional ownership. However, post-revolutionary context doesn't affect the impact of audit quality on the unlisted firms' financial performance characterised principally by family ownership. The study results could guide future regulatory initiatives in developing appropriate mechanisms to improve performance in Tunisia and countries having similar political and economic environments.
    Keywords: governance mechanisms; audit quality; financial performance; listed and unlisted companies.
    DOI: 10.1504/IJMFA.2023.10048231
     
  • Board characteristics, assurance auditing services role and earning management: evidence from Vietnam   Order a copy of this article
    by Thi-Kim-Tuyen Nguyen, Pham Tuan Anh 
    Abstract: The study examines the effect of corporate governance and assurance auditing services on earnings management in the case of Vietnam. We investigate that higher earnings manipulation is associated with higher board meeting frequencies and CEO/board chair position separation. Moreover, the qualified assurance auditing service insignificantly negatively affects earnings management. This finding suggests that pre-eminent perspectives of corporate governance systems from developed economies may not be a good fit for emerging markets like Vietnam. Generally, our paper emphasises the importance of the Vietnam policymaker's role in building effective monitoring mechanisms in the capital market by disciplining and supervising listed companies' current corporate governance applications. In addition, it is essential that the quality of assurance auditing services need to be enhanced to improve the transparency level in the capital market.
    Keywords: earning management; board meeting; auditing services; CEO duality; Vietnam.
    DOI: 10.1504/IJMFA.2023.10048861
     
  • Environmental, social and governance literature: a bibliometric analysis   Order a copy of this article
    by Mahender Yadav, Mohit Saini 
    Abstract: This article aims to illustrate the evolution of academic research and future research goals in the environmental, social, and governance (ESG) domain of business and management. A quantitative systematic review was conducted using a contemporary technique, 'bibliometric analysis', in which the study examined the most significant articles, authors, journals, institutions, and nations in ESG research and identified current topics by reviewing publications on the Web of Science database. The findings reveal that ESG research has been steadily rising in recent years. Most of the study was conducted in industrialised nations such as the USA, the UK, and Australia. By separating research themes using a bibliographic coupling, this paper highlights future research agendas that research scholars may undertake in further studies. The contribution of this publication is to study the diffusion trend and map the intellectual structure of ESG research by bibliometric tools, which makes it unique.
    Keywords: environmental; social; and governance; ESG; environmental; social; governance; bibliometric analysis; Web of Science; disclosures.
    DOI: 10.1504/IJMFA.2023.10049404