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Article
Publication date: 11 February 2025

Mark Kohlbeck and Lin Wang

The purpose of this study is to examine the effect of audit committee (AC) tenure on corporate governance, a topic that has been long debated. Social capital theory explains how…

41

Abstract

Purpose

The purpose of this study is to examine the effect of audit committee (AC) tenure on corporate governance, a topic that has been long debated. Social capital theory explains how directors’ effectiveness varies through tenure. Consistent with this theory, this paper argues that AC tenure has an inverted U-shaped relationship with AC governance.

Design/methodology/approach

This paper estimates a quadratic function that regresses constructs for AC governance on the average AC, the AC chair, and nonchair tenure, and their respective square terms. The constructs for AC governance include financial reporting quality measures and perceived auditor independence measures.

Findings

This paper finds that average AC, AC chair, and nonchair tenure have inverted U-shaped relationships with financial reporting quality, consistent with social capital theory. This paper also finds similar associations when examining perceived auditor independence. The results are generally consistent with AC directors accumulating knowledge and social capital, which improves AC governance to an optimal level, following which entrenchment and familiarity occur and AC governance declines.

Originality/value

To the best of the authors’ knowledge, this is the first study in AC governance literature to show a nonlinear relationship between AC tenure and AC governance. This paper extends Huang and Hilary (2018) by demonstrating that a nonlinear effect is also present in the AC, a key board committee responsible for monitoring financial reporting quality and appointing auditors and approving their services. This paper further documents that the AC subsumes the effect of the overall board in some areas of AC oversight, and reconciles the inconclusive findings of prior research by showing a nonlinear relationship between AC tenure and AC governance.

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Article
Publication date: 31 December 2024

Nongnapat Thosuwanchot and Jitrinee Chanphati

This conceptual paper aims to contribute to prior corporate social responsibility (CSR) studies by examining CSR issues through the lens of the behavioral theory of the firm…

45

Abstract

Purpose

This conceptual paper aims to contribute to prior corporate social responsibility (CSR) studies by examining CSR issues through the lens of the behavioral theory of the firm, which emphasizes the bounded rationality and limited cognition of firms’ decision-makers. The authors suggest that social aspiration may be a more important benchmark since stakeholders tend to evaluate a firm’s corporate social performance (CSP) against other comparable firms.

Design/methodology/approach

After reviewing various theoretical perspectives that have been applied to CSR studies spanning from 1985 to 2023, the authors summarize their limitations on examining executives’ decisions toward CSR initiatives. By drawing on the behavioral theory of the firm, a conceptual model was developed to explain how firm executives increase subsequent CSR initiatives when their firms’ CSP is below social aspiration.

Findings

This study suggests that firms increase their subsequent CSR initiatives when their CSP is below the performance of their peers. Furthermore, the authors propose three important characteristics of chief executive officers, including tenure, hubris and international experience, as boundary conditions that can impact the extent of firms’ subsequent CSR initiatives when CSP is below social aspiration.

Originality/value

The paper contributes to the CSR literature by emphasizing the influence of decision-makers’ bounded rationality on firms’ CSR initiatives.

Details

Social Responsibility Journal, vol. 21 no. 3
Type: Research Article
ISSN: 1747-1117

Keywords

Available. Open Access. Open Access
Article
Publication date: 22 February 2024

Marina Bagić Babac

Social media platforms are highly visible platforms, so politicians try to maximize their benefits from their use, especially during election campaigns. On the other side, people…

500

Abstract

Purpose

Social media platforms are highly visible platforms, so politicians try to maximize their benefits from their use, especially during election campaigns. On the other side, people express their views and sentiments toward politicians and political issues on social media, thus enabling them to observe their online political behavior. Therefore, this study aims to investigate user reactions on social media during the 2016 US presidential campaign to decide which candidate invoked stronger emotions on social media.

Design/methodology/approach

For testing the proposed hypotheses regarding emotional reactions to social media content during the 2016 presidential campaign, regression analysis was used to analyze a data set that consists of Trump’s 996 posts and Clinton’s 1,253 posts on Facebook. The proposed regression models are based on viral (likes, shares, comments) and emotional Facebook reactions (Angry, Haha, Sad, Surprise, Wow) as well as Russell’s valence, arousal, dominance (VAD) circumplex model for valence, arousal and dominance.

Findings

The results of regression analysis indicate how Facebook users felt about both presidential candidates. For Clinton’s page, both positive and negative content are equally liked, while Trump’s followers prefer funny and positive emotions. For both candidates, positive and negative content influences the number of comments. Trump’s followers mostly share positive content and the content that makes them angry, while Clinton’s followers share any content that does not make them angry. Based on VAD analysis, less dominant content, with high arousal and more positive emotions, is more liked on Trump’s page, where valence is a significant predictor for commenting and sharing. More positive content is more liked on Clinton’s page, where both positive and negative emotions with low arousal are correlated to commenting and sharing of posts.

Originality/value

Building on an empirical data set from Facebook, this study shows how differently the presidential candidates communicated on social media during the 2016 election campaign. According to the findings, Trump used a hard campaign strategy, while Clinton used a soft strategy.

Details

Global Knowledge, Memory and Communication, vol. 74 no. 11
Type: Research Article
ISSN: 2514-9342

Keywords

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Book part
Publication date: 11 March 2025

Eva Tutchell and John Edmonds

Abstract

Details

The Stalled Revolution: Is Equality for Women an Impossible Dream?
Type: Book
ISBN: 978-1-83549-193-5

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Article
Publication date: 19 February 2025

Emmanuel Mamatzakis and Eric Owusu Boahen

In this paper, the authors opt for an identification strategy to examine the moderating impact of the institutional environment on the association between modern slavery and…

14

Abstract

Purpose

In this paper, the authors opt for an identification strategy to examine the moderating impact of the institutional environment on the association between modern slavery and financial reporting quality, as measured by classification shifting and real earnings management around the world.

Design/methodology/approach

Using panel data between 2010 and 2018, the authors perform various analyses and robustness tests on a sample consisting of 134, 205 firm-year observations in 63 countries.

Findings

The results, which are robust, show a positive association between modern slavery and expense misclassification and real activities earnings management, confirming that the institutional environment facilitates prolonged and endless concealment of unethical and illegal business practices. In addition, we find that the quality of the legal environment moderates illegal modern slavery practices, unethical expense misclassification and real activities earnings management. The negative impact is more pronounced in a strong legal environment than in a weak legal environment. Our results are robust after controlling for the impact of auditing, including financial auditors, social auditing, corporate social responsibilities, environmental, social and governance score and corporate governance.

Research limitations/implications

The study’s findings are limited to a lack of modern slavery data prior to 2010. In addition, some of the variables examined are studied at the firm level, while other variables are at the state or county level. Finally, the study establishes an association between the variables of interest, and this does not necessarily imply causation.

Social implications

The findings have several important social, practical, policy, practitioner and regulatory implications for all types of countries and businesses. First, senior and corporate management committed to socially responsible reporting should intensify their momentum to deal with modern slavery risks and practices in their supply chains. Second, auditors and external monitoring agencies should strengthen their social and financial audits to uncover hidden modern slavery crimes and illicit financial benefits. Third, regulators and governments around the world should mandate laws and severe sanctions against illegal and illegitimate modern slavery practices. Fourth, the internal governance mechanism should be strengthened and modern slavery reporting, sustainability reports and social audits should be enforced and made compulsory in the governance section of the annual report.

Originality/value

The study provides novel evidence of the impact of modern slavery practices on financial reporting quality in an institutional environment. Our study contributes to the ongoing policy debate by showing how institutional and legal environments influence firms’ behaviour regarding modern slavery and financial reporting. The findings reveal the importance of robust regulatory frameworks and ethical auditing practices in curbing modern slavery and promoting transparency. As firms continue to navigate these challenges, strengthening institutional and ethical standards could play a key role in reducing illegal and unethical practices, ultimately contributing to better financial transparency and accountability on a global scale.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

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Article
Publication date: 31 December 2024

Nguyen Thanh Dong, Cao Thi Mien Thuy, Nguyen Vinh Khuong and Anh Huu Tuan Le

Drawing from agency and comprehension theories, this paper aims to examine the influence of annual report readability (ARR) on financial reporting quality (FRQ), with a focus on…

63

Abstract

Purpose

Drawing from agency and comprehension theories, this paper aims to examine the influence of annual report readability (ARR) on financial reporting quality (FRQ), with a focus on how information asymmetry moderates this relationship.

Design/methodology/approach

The study uses a sample of 467 listed firms in Vietnam from 2015 to 2021. To analyze the relationship between ARR and FRQ, this paper employs a Generalized Method of Moments (GMM) regression, incorporating information asymmetry as a moderating factor.

Findings

The research findings show that ARR has a positive and significant impact on the FRQ of Vietnamese-listed firms. This paper also finds that information asymmetry significantly and partially moderates the relationship between ARR and FRQ. Specifically, ARR can help alleviate the level of information asymmetry and contributes to improved FRQ.

Practical implications

From a practical perspective, this paper provides empirical evidence for managers, investors and related government departments to evaluate the effects of ARR and offers regulators a method to help improve the transparency of the stock market. More importantly, the results of this study have reference value for scholars and practitioners in developing countries like Vietnam.

Originality/value

From a theoretical perspective, our study adds to the growing literature on ARR, expands the scope of ARR research, elaborates on relevant economic consequences of ARR and complements the literature on the determinants of FRQ.

Details

International Journal of Accounting & Information Management, vol. 33 no. 1
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 4 July 2024

Mubashir Ali Khan, Josephine Tan-Hwang Yau, Aitzaz Ahsan Alias Sarang, Ammar Ali Gull and Muzhar Javed

This study aims to examine the extent to which information asymmetry affects investment efficiency and whether the presence of blockholders moderate this relationship.

296

Abstract

Purpose

This study aims to examine the extent to which information asymmetry affects investment efficiency and whether the presence of blockholders moderate this relationship.

Design/methodology/approach

We employ the data of firms listed on the Malaysian stock exchange for the period 2010–2018, to compose our sample. Our final sample includes the 100 largest non-financial firms based on market capitalization. Collectively, these 100 companies contribute 84.2% to the total market capitalization (MYR 1,730bn) which is representative of the whole market. The ordinary least squares regressions were used as the main estimation technique. The system generalized method of moments, two-stage least squares and propensity score matching were also used, to address potential endogeneity concerns.

Findings

We document a positively significant association of information asymmetry with investment inefficiency. These results imply that information asymmetry reduces investment efficiency and enhances sub-optimal investments. We also document that blockholders negatively moderate the relationship of information asymmetry with investment inefficiency. Further analyses show that investment inefficiency is higher in low-growth firms than in high-growth firms because of higher information asymmetry.

Research limitations/implications

We focus on Malaysia, which is a predominantly common-law Anglo-Saxon country. Graff (2008) documented that the investors are treated differently across legal systems and there are differences between the continental European and Anglo-Saxon countries. La Porta et al. (1999) documented that investors tend to have more legal protection in Anglo-Saxon countries. Therefore, our results may not be generalized to countries with different legal systems.

Practical implications

An important implication of our findings is that stakeholders may encourage the presence of blockholders and give them a voice to weaken the positive relationship between information asymmetry and investment inefficiency.

Originality/value

This study contributes to the contingency literature by investigating the moderating effect of an important governance mechanism, i.e. the presence of blockholders on information asymmetry-investment efficiency nexus. Despite being important, this moderating effect has been largely overlooked in the literature. Our study contributes by providing an understanding of how blockholders can influence investment decisions, offering insights for academics, investors and policymakers focused on improving the efficacy of investment decisions and governance structure.

Details

Journal of Applied Accounting Research, vol. 26 no. 1
Type: Research Article
ISSN: 0967-5426

Keywords

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