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We argue that managers’ choice to manage earnings depends on the trade-off in the present value of expected future net benefits associated with that choice. Specifically, we examine if discount rates are associated with the likelihood that managers engage in earnings management to meet or beat various earnings targets. We find that discount rates are positively associated with income-increasing earnings management. This means that managers increase both accrual-based and real earnings management when discount rates are higher. However, the economic magnitude of this association is relatively moderate.

This paper focuses on bank audit committees and examines whether audit committee members who are former auditors are associated with the acquisition of audit and non-audit services from their former employers.

The study empirically examines a sample of large banks that are included in the S&P Composite 1500.

The paper reports significantly lower audit fees and a higher proportion of non-audit fees to total fees when the audit committee chair is an alumnus of the incumbent audit firm. Moreover, additional analysis reveals that these findings are stronger for banks with more earnings management.

Overall, the findings indicate that audit firms might consider banks using their alumni as audit committee chairs to be less risky or easier to audit, thus requiring relatively less effort from the auditors. The reduced effort required to audit clients with audit firm alumni on their audit committees then has the effect of reducing the audit fees charged. Alternatively, their auditing experience and cognitive proximity might influence the assessment of the need for auditing or the ability to negotiate lower audit fees on the part of audit firm alumni.

This paper provides empirical evidence of the association between audit firm alumni in influential positions on an audit committee and fees paid to those audit firms in the banking industry. The findings contribute to the literature by suggesting that banks with affiliated former auditors chairing their audit committees not only have significantly lower audit fees but also a higher proportion is spent on non-audit services.

The purpose of this paper is to examine the roles of country-level characteristics versus firm-level characteristics in explaining variations in firms’ voluntary strategy disclosures.

Strategy disclosure in annual reports is measured using an index of 40 items derived from the strategy literature. The sample is 204 large companies from 12 Asian and European countries in 2005. The disclosure index is subdivided into four underlying latent constructs using principal components analysis. The authors then use OLS regression to test whether total disclosure score, and the latent constructs are associated with country-level characteristics and firm-level characteristics.

The authors find that total strategy disclosures are more prevalent in stakeholder-oriented countries, in countries with greater levels of financial transparency, but are less prevalent in countries with a culture of secrecy, and strategy disclosures are more likely to occur in companies with greater economic incentives to disclose, with a Big 4 auditor or which are listed in New York. These findings also occur but not as consistently with the four latent constructs.

The sample used in this paper comprises large public companies, so the findings may not be generalisable to all companies. Nevertheless, the findings demonstrate that both country- and firm-level variables matter in explaining voluntary strategy disclosure.

The IASB released an IFRS Practice Statement in 2010, which recommends, but does not require, disclosure of information about corporate strategy in Management Commentary statements. The findings of this paper may help inform the issue of whether regulators should make strategy disclosures mandatory.

The paper contains the first detailed examination of the roles of country-level characteristics versus firm-level characteristics in explaining variations in corporate voluntary strategy disclosures.

Auditing is seasonal, with the majority of U.S. public companies having a December fiscal year-end. This results in an audit “busy season” and “off-season” with a non-trivial seasonal impact on the pricing of audit services. We apply an economic framework that explains how audit seasonality affects both the magnitude and the price elasticity of audit demand and audit supply. We find that the audit busy season is associated with an audit fee premium of approximately 10% based on a meta-analysis of 97 analyses from 18 audit fee studies of U.S public companies. A meta-regression of the contextual differences in research design between studies reveals that examining only Big N attenuates the busy season effect size but does not eliminate it, and that the busy season effect size may be larger post-SOX.

This paper aims to examine the influence of culture on the adoption and use of social media platforms for corporate disclosures by firms in a cross-country setting.

It is contended that social media corporate disclosure (SMCD) is culturally influenced because the primary purpose of social media is to connect people in social settings, and social settings are distinguished by their cultures. Using a sample of 1,420 firms from 36 countries and Hofstede’s cultural dimensions, this study examines the direct effects of culture on SMCD and its moderating effects on the relationship between SMCD and the agency determinants of corporate disclosure.

It is found that cultural dimensions directly affect the adoption and use of SMCD. Additionally, the agency determinants of disclosure, size, leverage and growth are positively associated with the adoption, and use of SMCD, and these associations are moderated by the cultural dimensions.

The Hofstede cultural dimensions are broad country-level variables based on the culture of the majority in the population. However, larger countries have many cultures. This study does not cover within-country cultural effects on SMCD. It also does not cover firm-level culture and accounting culture because these factors are derived from national culture. This study adds culture as a country-level determinant of why companies adopt and use social media.

The study provides investors and policymakers with an understanding of the nature of SMCD adoption and use in different cultural settings. It also makes managers aware of which cultural settings are more amenable to SMCD.

Social media, by design, have social implications. Examining the role of culture in the use of social media provides societal reasons for the use of SMCD by companies.

Since social media are interactive in form rather than simply one-way disclosure devices, this study goes beyond the realm of corporate disclosure into the less researched area of corporate communication via social media.

The primary objective of this paper is to investigate the relation between the joint provision of sustainability assurance and the readability of sustainability assurance statements. Additionally, it explores whether the presence of a female assurance partner influences the relation between the joint provision of sustainability assurance and the readability of sustainability assurance statements.

We analyzed a dataset comprising 882 firm-year observations from companies operating in sustainability sensitive industries for the period that spans the years 2016–2018.

The research indicates that joint sustainability assurance provision is associated with a more readable sustainability assurance statement, consistent with the “four-eyes” principle. Furthermore, the presence of a female assurance provider influences the joint assurance provision’s impact on sustainability assurance statement readability. Collectively, these results remain robust as they hold unchanged after controlling for endogeneity concerns.

This study provides novel insights into the recent sustainability assurance literature, being the first to examine joint assurance provision, assurance partner gender and sustainability assurance statement readability.

This study has the potential to catalyze regulatory and policy initiatives by providing compelling evidence in favor of mandating joint audits within the area of sustainability assurance practices. Additionally, this research contributes to the ongoing discussion about gender diversity in accounting and nonaccounting assurance firms, providing evidence of the positive impact of female assurance partners on sustainability assurance statement readability.

The regression results provide preliminary evidence on how the presence of a female audit partner influences the relationship between the sustainability assurance joint provision and sustainability assurance statement readability, an issue that has not been examined before.

Corruption is a phenomenon that is ubiquitous, but the extent and the form differ across countries. According to Transparency International, the Corruption Perception Index (CPI) in year 2001 varied from 0.4 to 9.9 (10 is completely corruption free). The average score for the 91 countries surveyed was 4.76 (with a standard deviation of 2.39). Why is there so much cross-country difference? Why are some countries virtually corruption free, but are others fraught with corruption?

This paper examines the organizational resilience of audit firms during the early stages of COVID-19. The unexpected restrictions placed on travel and on-site working created unanticipated barriers for auditors in Hong Kong. The authors expect that auditors with greater organizational resilience can respond to unexpected situations and restore expected performance levels relatively quickly.

The authors utilize a sample of 1,008 companies listed on Hong Kong Stock Exchange (HKEX) with a financial year-end of December 31. The authors identify five proxies contributing to organizational resilience: auditor size, industry specialization, diversity, geographic proximity to the client and auditing a new client. The authors use audit report timeliness as this study's main dependent variable.

This study's full-sample results suggest that larger auditors, industry specialists and auditors with closer relationships to clients issued more timely audit reports during the pandemic. The analysis of a subsample of companies that initially published unaudited financial statements reveals that industry expertise and longer auditor-client relationships significantly reduced the need for year-end audit adjustments. Finally, the authors find that larger auditors were more likely to offload clients, whereas industry specialists were more likely to retain clients.

The results of the paper suggests that audit firm characteristics associated cognitive abilities, behavioral characteristics and contextual conditions are associated with audit firm organizational resilience and, consequently, helps auditors respond unexpected changes in the audit environment.

The findings of the paper are informative for those involved in audit firm management or auditor hiring and retention decisions.

This study is the first to link organizational resilience to the performance of audit firms in a time of unexpected events. The authors connect three auditor and two auditor-client dimensions to the organizational resilience of the audit firms.

The literature on the influence of audit committees (ACs) and cosmetic accounting (CSA) is scarce. This paper aims to examine the influence of AC attributes on CSA and how this relationship is moderated by the audit price (AUPR).

The study used pooled logistic regressions to analyse 624 firm-year observations of listed companies in Nigeria from 2008 to 2016.

The results show that AC financial accounting expertise, AC legal expertise and female AC membership were negatively related to CSA. The negative relationship is highly pronounced when a firm incurs higher audit fees. Results for the robustness checks were similar, even with changes to the measurements of dependent and independent variables and alternative estimation.

This study can benefit policymakers and regulators, enabling them to better appreciate the importance of AC attributes and AUPR in curtailing artificial manipulation and enhancing financial reporting quality.

This study can benefit policymakers and regulators, enabling them to better appreciate the importance of AC attributes and AUPR in curtailing artificial manipulation and enhancing financial reporting quality.

The findings provide an initial insight into the moderating effect of AUPR on the relationship between AC attributes and CSA.

Since it is believed that economic growth in oil-rich countries is highly influenced by oil price movements, this study aims to explore the relationship between oil price volatility (uncertainty) and earnings-management decisions.

Financial data from oil-exporting countries were used to explore the relationship between oil price volatility and earnings-management decisions. The study used univariate and multivariate analysis. The modified Jones model is the proxy accrual earnings management. Further, the standard deviation of daily oil price returns is used to proxy annualised oil price volatility.

The results show that there is an association between oil price volatility and accrual earnings management. Specifically, there is a positive and significant relationship between negative accruals and oil price volatility, indicating that firms are inclined to conduct income-decreasing earnings management in periods of high oil price volatility.

This study’s findings have important implications for regulators and investors because they indicate that the uncertainty of oil price volatility has an influence on earnings quality in oil-dependent economies. This is especially important considering the ongoing debate on transparency issues.

To the best of the authors’ knowledge, this study is the first to investigate the relationship between oil prices volatility and earning management behaviour for non-financial firms. Further, the study uses unique data of oil-dependent economies.