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Article
Publication date: 31 August 2017

Iman Harymawan and Dewi Nurillah

The purpose of this study is to examine the relationship between corporate reputation and earnings quality. This study uses a sample of 1,092 firm year observations from 273 firm…

1989

Abstract

The purpose of this study is to examine the relationship between corporate reputation and earnings quality. This study uses a sample of 1,092 firm year observations from 273 firm listed companies on the Indonesia Stock Exchange from 2013 to 2016, except for the financial industry. We uses a public measure, “100 Top Emiten” by Investor magazine, as a proxy for corporate reputation, while earnings quality is measured by calculating the absolute value of discretionary accrual. Growth of assets, firm size, leverage and profitability are used as control variables in this study. Multiple linear regression analysis is used to test the research hypothesis. The results of the regression in this study indicate that corporate reputation has a positive and significant relationship with earnings quality. This indicates that a reputable company will be encouraged to produce an earnings quality in an effort for the company to maintain investor confidence in the company, so that the company's image and reputation can be maintained. Earnings management in this study was calculated using cross-sectional method instead of time series method. Cross-sectional method is a method by comparing the financial data of a company with a company or other similar industries, whereas the time series method uses the comparison of financial data in a period with the previous period by analyzing what happens behind the trend figures on a company.

Details

Asian Journal of Accounting Research, vol. 2 no. 2
Type: Research Article
ISSN: 2459-9700

Available. Content available

Abstract

Details

Journal of Accounting & Organizational Change, vol. 19 no. 4
Type: Research Article
ISSN: 1832-5912

Available. Open Access. Open Access
Article
Publication date: 31 August 2016

John Nowland

This article provides a brief overview of the literature on board of director performance, highlighting the difficulties in attempting to directly measure the performance of…

1704

Abstract

This article provides a brief overview of the literature on board of director performance, highlighting the difficulties in attempting to directly measure the performance of boards of directors and how various studies have tackled this challenge. As an illustration, I show that two current measures of board of director performance, board meeting activity and director attendance, suggest that the boards of Asian firms do not compare favorably to the boards of firms from developed markets. Suggestions for future research on the performance of corporate boards are provided, as well as implications for board of director practices in Asia.

Details

Asian Journal of Accounting Research, vol. 1 no. 2
Type: Research Article
ISSN: 2459-9700

Available. Open Access. Open Access
Article
Publication date: 12 July 2024

Stiven Agusta, Fuad Rakhman, Jogiyanto Hartono Mustakini and Singgih Wijayana

The study aims to explore how integrating recent fundamental values (RFVs) from conventional accounting studies enhances the accuracy of a machine learning (ML) model for…

842

Abstract

Purpose

The study aims to explore how integrating recent fundamental values (RFVs) from conventional accounting studies enhances the accuracy of a machine learning (ML) model for predicting stock return movement in Indonesia.

Design/methodology/approach

The study uses multilayer perceptron (MLP) analysis, a deep learning model subset of the ML method. The model utilizes findings from conventional accounting studies from 2019 to 2021 and samples from 10 firms in the Indonesian stock market from September 2018 to August 2019.

Findings

Incorporating RFVs improves predictive accuracy in the MLP model, especially in long reporting data ranges. The accuracy of the RFVs is also higher than that of raw data and common accounting ratio inputs.

Research limitations/implications

The study uses Indonesian firms as its sample. We believe our findings apply to other emerging Asian markets and add to the existing ML literature on stock prediction. Nevertheless, expanding to different samples could strengthen the results of this study.

Practical implications

Governments can regulate RFV-based artificial intelligence (AI) applications for stock prediction to enhance decision-making about stock investment. Also, practitioners, analysts and investors can be inspired to develop RFV-based AI tools.

Originality/value

Studies in the literature on ML-based stock prediction find limited use for fundamental values and mainly apply technical indicators. However, this study demonstrates that including RFV in the ML model improves investors’ decision-making and minimizes unethical data use and artificial intelligence-based fraud.

Details

Asian Journal of Accounting Research, vol. 9 no. 4
Type: Research Article
ISSN: 2459-9700

Keywords

Available. Open Access. Open Access
Article
Publication date: 12 August 2024

Esraa Esam Alharasis

The objective of this study is to present novel evidence regarding the impact of the Key Audit Matters (KAM) disclosure requirements of International Standard on Auditing – 701…

493

Abstract

Purpose

The objective of this study is to present novel evidence regarding the impact of the Key Audit Matters (KAM) disclosure requirements of International Standard on Auditing – 701 (ISA) on the auditing profession concerning reimbursement costs in underdeveloped nations, Jordan.

Design/methodology/approach

A year-industry fixed-effects OLS regression model has been employed to test the developed hypotheses. The regression analysis of the period from 2005 to 2022 tests the presence of KAM disclosures in Jordanian finance business, while the regression analysis of the period from 2017 to 2022 tests the actual impact of KAM disclosure following the first implementation of ISA-701 in Jordan.

Findings

The analysis has verified that the presence and the proportions of KAM disclosures outlined in ISA-701 resulted to significant auditing compensatory expenses. The findings confirmed that KAM disclosures increase auditor workload, responsibility, complexity, and risk, consequently resulting in higher reimbursement expenses.

Practical implications

The findings of this study have the potential to serve as a basis for the development of a novel financial regulatory legislation or a regulated framework for disclosing significant occurrences. This paper provides new empirical evidence to standard-setters and policymakers regarding the requirement of ISA-701 for external auditors to disclose KAM. This study is advantageous for stakeholders, regulatory agencies, standard-setters, and audit report readers who are interested in KAM disclosures and the implementation of ISA-701. The results could inspire the academic community to obtain fresh data from emerging markets to ascertain the impact of KAM disclosure on audit practices.

Originality/value

To the author's knowledge, this study is one of the few empirical investigations into the impact of current additional disclosure rules on the audit profession concerning reimbursement costs. It provides preliminary evidence linking ISA regulations to corporate productivity in Jordan, a developing nation. Little is known about how developing nation auditors react to KAM disclosures' role in stakeholder protection and how their expanded reporting obligations influence them. This study examines audit behaviour in a weak legal setting, unlike most prior studies, which have been done in highly regulated systems.

Details

Asian Journal of Accounting Research, vol. 10 no. 1
Type: Research Article
ISSN: 2459-9700

Keywords

Available. Open Access. Open Access
Article
Publication date: 7 November 2023

Deepak Verma, Varun Dawar and Pankaj Chaudhary

The present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India…

3038

Abstract

Purpose

The present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India, considered an emerging market.

Design/methodology/approach

The sample selected represents the 376 non-financial firms listed on the Bombay Stock Exchange (BSE). With a 20-year time frame, the authors used the absolute value of discretionary accruals (McNichols, 2002) (DA) as a proxy for EM, which is inversely related to EQ. The authors analyzed data using OLS, fixed effect (FE), 2SLS and Panel-IV estimators.

Findings

The authors found that most audit attributes positively affect EQ. In the Indian context, joint auditor (JA), auditor size (A_SIZE), auditor fee (A_FEE) and auditor tenure (A_TENURE) have a negative association with EM indicating high EQ. In contrast, auditor rotation (A_ROTATON) positively affects EM confirming low EQ.

Research limitations/implications

The present study uses Big-4 and its member firms as a proxy of auditor size (A_SIZE); instead, other bases may be taken for it, like the dominant audit firms in a particular industry in sample data, etc. The authors have started audit tenure from the base year, i.e. 2001, which may ignore the association of auditor and auditee just before 2001.

Practical implications

The study findings would enhance policymakers' willingness to prepare appropriate regulations regarding JAs and auditor rotation, which might improve financial market efficiency and reduce financial fraud among Indian corporates.

Originality/value

To the best of the authors' knowledge, this is the first study to incorporate “Joint Auditor” (JA) as a proxy for audit quality in the Indian context, which might significantly contribute to the literature.

Details

Asian Journal of Accounting Research, vol. 9 no. 1
Type: Research Article
ISSN: 2459-9700

Keywords

Available. Open Access. Open Access
Article
Publication date: 17 December 2020

Faizi Weqar, Zubair Ahmad Sofi and S.M. Imamul Haque

The prime intention of this study is to examine the influence of intellectual capital (IC) on the financial performance of Indian companies listed on Standard and Poor Bombay…

2514

Abstract

Purpose

The prime intention of this study is to examine the influence of intellectual capital (IC) on the financial performance of Indian companies listed on Standard and Poor Bombay Stock Exchange Sensitive Index (BSE SENSEX).

Design/methodology/approach

The study employs the data of 30 most significant and most prominent companies of India listed on BSE SENSEX for 10 years from 2009–2010 to 2018–2019. Value Added Intellectual Coefficient (VAICTM) methodology developed by Pulic (2000) was employed for measuring the efficiency of the IC.

Findings

The efficiency of IC is substantially and positively associated with the financial performance of the Indian companies as measured by return on assets (ROA), market-to-book (MB) ratio and return on equity (ROE). Amongst the three dimensions of VAIC, capital employed efficiency (CEE) was the most vital element in contributing to the firm financial performance, followed by human capital efficiency (HCE). Structural capital efficiency (SCE) only helps in enhancing the ROA of Indian firms.

Research limitations/implications

The study results are only restricted to the 30 companies of India listed on S&P BSE SENSEX Index. Thus generalization of the result needs especial caution.

Originality/value

The study fills the void in the current literature of IC and business performance and extends the understanding of their relationship by providing empirical evidence.

Details

Asian Journal of Accounting Research, vol. 6 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Available. Open Access. Open Access
Article
Publication date: 11 December 2019

Syed Tauseef Ali, Zhen Yang, Zahid Sarwar and Farman Ali

In view of organizational inertia, with the occurrence of a major event, though resource rigidity minimizes, however simultaneously, it increases process rigidity, which creates…

9893

Abstract

Purpose

In view of organizational inertia, with the occurrence of a major event, though resource rigidity minimizes, however simultaneously, it increases process rigidity, which creates difficulties in motivating managers and dealing with the agency problem. Therefore, keeping in mind the high demand created by the China–Pakistan Economic Corridor and Naya Pakistan Housing Scheme in the cement sector of Pakistan, the purpose of this paper is to investigate the impact of corporate governance (CG) on the cost of equity (COE) in the cement sector, to deal with the problems surging during and after the completion of these projects and highlight further opportunities for the cement sector of Pakistan.

Design/methodology/approach

CG is a qualitative concept therefore, eight proxies have been used to measure it along with the two control variables. This study uses balance panel data of six years from 2012 to 2017, collected from 18 companies of the cement sector of Pakistan. Descriptive statistics have been used to describe the data, correlation matrix to see the nature of the relationship, and Pooled OLS as the estimation technique, while to analyze the data a statistical package 13 has been used. To measure the COE, the Capital Asset Pricing Model (CAPM) has been used.

Findings

Regression results suggest that block ownership, insider ownership and the board size are insignificant, while CEO tenure is negatively and significantly associated with the COE. Non-executive directors, independence and CEO duality are insignificant; however, diversity is positively and significantly associated with the COE. Moreover, the mean value of the COE is 8.22 percent for the cement sector, while the coefficient of determination of the model under study is 74 percent.

Research limitations/implications

This paper is based on the data from the cement sector of Pakistan only. Therefore, this is the reason that these results cannot be generalized on the whole economy of Pakistan.

Practical implications

This study helps in finding out the COE value specific to the cement sector, which will help this sector to evaluate the capital budgeting decision more precisely and accurately than before. Moreover, the association of diversity as positive, while independence as negative with the COE highlights a room for improvement in the implementation of CG codes by SECP. This study also helps to mitigate the impact of inertia, the after-effects of high demand, and managing the agency problem in the cement sector.

Originality/value

This is the first study using CG data collected just after the revised promulgation of CG codes in 2012, along with a wide range of eight proxies measuring CG and its impact on the COE in the cement sector.

Details

Asian Journal of Accounting Research, vol. 4 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Available. Open Access. Open Access
Article
Publication date: 7 September 2020

Nicholas Asare, Margaret Momo Laryea, Joseph Mensah Onumah and Michael Effah Asamoah

This study examines the causal relationship between intellectual capital and asset quality of banks in Ghana.

3749

Abstract

Purpose

This study examines the causal relationship between intellectual capital and asset quality of banks in Ghana.

Design/methodology/approach

Using annual data extracted from audited financial statements of 24 banks from 2006 to 2015, a ratio of non-performing loans to gross loans and advances is employed to estimate asset quality growths while the value-added intellectual coefficient by Pulic (2008, 2004) measures intellectual capital. The panel-corrected standard errors estimation technique is used to estimate panel regressions with asset quality as the dependent variable.

Findings

Asset quality of banks in Ghana is generally not affected by intellectual capital. However, when intellectual capital is divided into its components, the study indicates that there are significant positive relationships between asset quality and two components of intellectual capital. Thus, structural capital and human capital efficiencies positively affect the asset quality of banks.

Practical implications

The findings of the study implore managements of banks to increase structural and human capital investments and efficiencies to improve asset quality. Furthermore, the results have direct implications on developments in financial markets in emerging economies.

Originality/value

The study analyses the link between typical intellectual capital and asset quality of banks which is yet to be empirically examined in an emerging banking market.

Details

Asian Journal of Accounting Research, vol. 6 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Available. Open Access. Open Access
Article
Publication date: 23 February 2022

Dharen Kumar Pandey, Vineeta Kumari and Brajesh Kumar Tiwari

The authors examine the impacts of corporate announcements on stock returns during the pandemic stress.

6493

Abstract

Purpose

The authors examine the impacts of corporate announcements on stock returns during the pandemic stress.

Design/methodology/approach

The authors employ the event study methodology with the market model on a sample of 90 events (announcement and ex-date).

Findings

The authors find that all the corporate announcements do not impact the stock returns in a similar pattern. While the bonus announcement, ex-bonus and ex-split events led to positive significant abnormal returns on the event date, the rights issue and stock-split announcements failed to influence the stock returns. The findings suggest that before making such announcements, the corporates should wait until the market recovers because even the positively impacting events result in negative market responses during pandemic stress.

Practical implications

This study will guide the policymakers to stimulate share prices during such pandemics with the help of various corporate announcements. The investors will be assisted in understanding the stock market mechanism and making wise decisions before reacting to corporate actions during a pandemic or emergency period. While the policymakers are concerned with influencing the share prices, the investors are concerned with the composition of the risk-return parameters in their portfolio. This study will act as an essential investment tool for both.

Originality/value

To the best of the authors’ knowledge, the authors conduct the first-ever study to examine the impacts of corporate announcements during a pandemic stress period that significantly contributes to the literature. The authors examine the announcement effects in India and accurately anticipate that this study will be a pioneer in this field. This study also paves the way for future researches in this area.

Details

Asian Journal of Accounting Research, vol. 7 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

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