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Article
Publication date: 17 June 2024

Patrick Kraus, Julian Kappl and Dennis Schlegel

Due to the disruptive nature of digital transformation, firms can hardly ignore the further digitalisation of processes and business models. Implementing such initiatives triggers…

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Abstract

Purpose

Due to the disruptive nature of digital transformation, firms can hardly ignore the further digitalisation of processes and business models. Implementing such initiatives triggers enormous investments in infrastructure and software, making the evaluation of digital investments crucial for a firm’s competitive situation.

Design/methodology/approach

Given the dynamics and uncertainties inherent in digital transformation, a qualitative, inductive research approach based on semi-structured interviews with high-level finance executives has been employed.

Findings

Our findings indicate widespread dissatisfaction with traditional investment appraisal methods for evaluating digital investments. Data also suggest that non-financial considerations are frequently taken into account, albeit implicitly, as participants struggled to clearly conceptualize these criteria.

Originality/value

The literature indicates important research gaps regarding the applicability and usage of traditional, predominantly financial, investment appraisal methods in digital contexts. This research enhances our understanding of digital investment evaluation, by (i) developing an exploratory conceptual framework of potential qualitative evaluation criteria and (ii) providing an in-depth and detailed understanding of the barriers to implementing investment appraisal methods.

Details

Digital Transformation and Society, vol. 3 no. 4
Type: Research Article
ISSN: 2755-0761

Keywords

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Article
Publication date: 1 August 2023

Muhammad Usman, Jacinta Nwachukwu, Ernest Ezeani, Rami Ibrahim A. Salem, Bilal Bilal and Frank Obenpong Kwabi

The authors examine the impact of audit quality (AQ) on classification shifting (CS) among non-financial firms operating in the UK and Germany.

445

Abstract

Purpose

The authors examine the impact of audit quality (AQ) on classification shifting (CS) among non-financial firms operating in the UK and Germany.

Design/methodology/approach

This paper used various audit committee variables (size, meetings, gender diversity and financial expertise) to measure AQ and its impact on CS. The authors used a total of 2,110 firm-year observations from 2010 to 2019.

Findings

The authors found that the presence of female members on the audit committee and audit committee financial expertise deter the UK and German managers from shifting core expenses and revenue items into special items to inflate core earnings. However, audit committee size is positively related to CS among German firms but has no impact on UK firms. The authors also document evidence that audit committee meetings restrain UK managers from engaging in CS. However, the authors found no impact on CS among German firms. The study results hold even after employing several tests.

Research limitations/implications

Overall, the study findings provide broad support in an international setting for the board to improve its auditing practices and offer essential information to investors to assess how AQ affects the financial reporting process.

Originality/value

Most CS studies used market-oriented economies such as the USA and UK and ignored bank-based economies such as Germany, France and Japan. The authors provide a comparison among bank and market-oriented economies on whether the AQ has a similar impact on CS or not among them.

Details

Journal of Applied Accounting Research, vol. 25 no. 3
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 18 June 2024

Gifty Adjei-Mensah, Collins G. Ntim, Qingjing Zhang and Frank Boateng

The objective of this paper is to synthesize and extend the existing understanding of social health accounting (SHA) literature within the perspectives of social health…

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Abstract

Purpose

The objective of this paper is to synthesize and extend the existing understanding of social health accounting (SHA) literature within the perspectives of social health disclosures (SHAD) and the effect of social health problems on public and private sector accounting.

Design/methodology/approach

This study provides a comprehensive and up-to-date systematic literature review (SLR) of past studies on social health within the accounting literature. This is done by employing a three-step SLR research design to investigate a sample of papers, made up of 62 mixed, qualitative and quantitative studies conducted in over 23 countries, drawn predominantly from the extant accounting literature from 2013 to 2023 and published in 25 peer-reviewed journals.

Findings

Our SLR offers several findings. First, we find that existing SHA studies apply theories in SHAD studies, but hardly apply them to explain the impact of health problems on business outcomes. Second, we show that the extant studies have focused predominantly on rigorous empirical studies on SHAD, while this is scarce for studies examining the impact of diseases/health problems on both public and private sector accounting. Third, we identify several research design weaknesses, including a lack of primary data analysis, mixed-methods approach and rigorous qualitative studies. Finally, we present directions for future SHA research.

Originality/value

In contrast to the ever-increasing general social and environmental accounting (SEA) research, existing studies examining global health issues and challenges (e.g. diseases, epidemics and pandemics), especially from an accounting perspective are rare. Nonetheless, the past decade has witnessed a steady increase in research on corporate accounting for, and reporting of, health issues; although the emerging literature remains fragmented thereby impeding the generation of useful empirical and theoretical insights for policymakers, practitioners and researchers. Consequently, this paper offers extensive and timely SLR of the existing studies on SHA; critically reviewing past findings published in a wide range of peer-reviewed international journals that discuss the current state of global SHA research, their weaknesses and set future research agenda.

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Article
Publication date: 1 August 2024

Alvaro Remesal

Clawback provisions entitle shareholders to recover previously awarded incentive compensation after the discovery of accounting manipulation or misconduct. The author evaluates…

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Abstract

Purpose

Clawback provisions entitle shareholders to recover previously awarded incentive compensation after the discovery of accounting manipulation or misconduct. The author evaluates the impact of clawback enforcement heterogeneity on the horizon of executive compensation.

Design/methodology/approach

The author provides empirical tests to evaluate the impact of clawback adoption decisions. The author deals with the endogeneity of clawback adoption decisions through an instrumental variables strategy that exploits the transmission of governance choices within firms’ networks.

Findings

While the author finds that clawback adoption reduces the frequency of accounting manipulation, this reduction is accompanied by heterogeneous effects on the horizon of executive pay across firms. Clawback adopters with high director independence, high leverage, high managerial termination payments and low executive ownership tilt their compensation toward the short-term.

Practical implications

The results, robust to alternative specifications, suggest that clawbacks allow strong-enforcement firms to tilt compensation toward the short-term, offsetting some of the direct manipulation disincentives generated by the clawback. The stock market reacts positively to the adoption in firms with weak enforcement, suggesting that clawbacks significantly reduce the managers’ rent-extraction capacity.

Originality/value

Using a novel empirical and identification approach, the results suggest that clawbacks allow strong-enforcement firms to tilt compensation toward the short-term, offsetting some of the direct manipulation disincentives generated by the clawback.

Details

International Journal of Accounting & Information Management, vol. 32 no. 5
Type: Research Article
ISSN: 1834-7649

Keywords

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