Provides a comprehensive, critical review of failure prediction with cash flow information since Beaver (1966); and tabulates the methods and cash flow variables used, and the…
Abstract
Provides a comprehensive, critical review of failure prediction with cash flow information since Beaver (1966); and tabulates the methods and cash flow variables used, and the results produced. Describes the literature as “inconsistent and inconclusive” and discusses possible reasons why, e.g. the measurement and diversity of cash flows, lack of model validation, multicollinearity etc. Points out the importance of cash to solvency and dividend payouts; and the limitations it places on creative accounting. Summarizes the reasons for previous inconsistencies and considers possibilities for further research.
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Satya Prakash Mani, Shashank Bansal, Ratikant Bhaskar and Satish Kumar
This study aims to examine the literature from the Web of Science database published on board committees between 2002 and 2023 and outline the quantitative summary, journey of…
Abstract
Purpose
This study aims to examine the literature from the Web of Science database published on board committees between 2002 and 2023 and outline the quantitative summary, journey of board committees’ research and suggest future research directions.
Design/methodology/approach
This study examines bibliometric-content analysis combined with a systematic literature review of articles on board committees to document the summary of the field. The authors used co-citation, co-occurrence and cluster analysis under bibliometric-content analysis to present the field summary.
Findings
Board committee composition, such as their gender, independence and expertise, as well as factors affecting corporate governance, such as reporting quality, earnings management and board monitoring, all have a significant impact on board committee literature. The field is getting growing attention from authors, journals and countries. Nevertheless, there is a need for further exploration in areas like expertise, member age and tenure, the economic crisis and the nomination and remuneration committee, which have not yet received sufficient attention.
Originality/value
This paper has both theoretical and practical contributions. From a theoretical perspective, this study substantiates the prevalence of agency theory within board committee literature, reinforcing the foundational role of agency theory in shaping discussions about board committees. On practical ground, the comprehensive overview of board committee literature offers scholars a road map for navigating this field and directing their future research journey. The identification of research gaps in certain areas serves as a catalyst for scholars to explore untapped dimensions, enabling them to strengthen the essence of the committees’ performance.
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Divesh Sharma and Umesh Sharma
The purpose of this paper is to examine the factors related to the use of the balanced scorecard (BSC) by private companies. Specifically, the authors examine how foreign…
Abstract
Purpose
The purpose of this paper is to examine the factors related to the use of the balanced scorecard (BSC) by private companies. Specifically, the authors examine how foreign ownership, focus on a global market beyond the local company’s geographic region and other sophisticated management accounting practices (MAPs) (activity-based costing, just-in-time and total quality management) are related to the use of the BSC.
Design/methodology/approach
The paper takes a contingency theoretic perspective. The data in this study is based on responses to a survey questionnaire that was mailed to 300 non-listed private companies in Singapore. A total of 135 responses were received, but 23 were incomplete, and thus, rendered unusable. Therefore, the final sample for the study is 112 private companies yielding a 37.3 per cent response rate that is considered high for survey research.
Findings
The authors find significant associations between the use of BSC and foreign ownership, focus on a global market and other sophisticated MAPs. The authors find that foreign ownership and a global market focus are significantly and consistently related to the extent to which the BSC is used across seven different management control purposes. The authors also find some evidence of associations between other sophisticated MAPs and the extent to which the BSC is used for management control purposes.
Practical implications
Private companies can use the BSC to better manage risks and use it for purposes such as communicating strategy and objectives, setting targets, evaluating performance, rewarding employees and managers, motivating employees and managers, controlling performance and coordinating across activities, departments and/or functional areas. The study has limitations such as the model is limited and excludes the effects of other significant contingency factors such as organisational culture. It may be appropriate to interview organisational participants to learn more about how their national and organisational culture affects the decision to use the BSC.
Originality/value
The findings fill a critical void in the literature by providing new evidence on the determinants of the use of the BSC by private companies.
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Cori Crews, John Abernathy, Jimmy Carmenate, Divesh Sharma and Vineeta Sharma
The purpose of this study is to investigate the association between nonaudit services (NAS) and out-of-period adjustments (OOPAs). Over the years, the number of OOPAs has risen…
Abstract
Purpose
The purpose of this study is to investigate the association between nonaudit services (NAS) and out-of-period adjustments (OOPAs). Over the years, the number of OOPAs has risen while the number of restatements has decreased. This could indicate an improvement in financial reporting quality. It could also indicate the use of a type of stealth restatement for opportunistic purposes. These less prominent restatements are more likely to go undetected and could perpetuate opportunistic disclosure and mitigate the likelihood of unfavorable market reactions.
Design/methodology/approach
The authors use a two-stage multivariate regression analysis to examine the relationship between NAS and the reporting of an OOPA. The authors use prior research on NAS to guide the model development. The authors perform several robustness checks including different types of NAS and different characteristics of OOPAs.
Findings
The results indicate that NAS has a significantly negative association with the existence of OOPAs. The core findings suggest that NAS does not impair auditor independence. Rather, greater amounts of NAS may contribute to knowledge spillover, which leads to higher financial reporting and audit quality. The results are robust to several additional tests.
Research limitations/implications
The results raise interesting implications for regulators, executives, auditors, investors and future research. The authors provide insight into the relationship between NAS and auditor independence.
Originality/value
To the best of the authors’ knowledge, prior research has not considered the effect of NAS on OOPAs. The authors contribute to the literature by providing evidence that OOPAs, a form of stealth restatements, is an important consideration in audit quality research.
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Barri Litt, Divesh Sharma and Vineeta Sharma
The purpose of this paper is to provide initial evidence on the association between environmental initiatives and earnings management. Prior literature documents firms…
Abstract
Purpose
The purpose of this paper is to provide initial evidence on the association between environmental initiatives and earnings management. Prior literature documents firms participating in environmental initiatives to report relatively stronger financial performance. Moreover, firms with superior performance have been shown to engage in greater levels of earnings management. A natural question that arises is to what extent do firms with environmental initiatives engage in earnings management to report better financial performance?
Design/methodology/approach
The study draws on two theoretical frameworks, external monitoring and internal corporate culture, to predict an inverse association between environmental initiatives and earnings management. The authors test this prediction using an earnings management regression model, estimating discretionary accruals using the modified-Jones approach.
Findings
The study finds that firms with environmental initiatives exhibit lower earnings management proxied by absolute and income-increasing total discretionary accruals. The authors further find pollution prevention and climate related initiatives to help explain this inverse association. The results imply that firms practising environmental responsibility report better financial performance, with the most likely reason being due to real economic performance rather than through earnings management techniques.
Originality/value
This study provides initial evidence on the association between environmental initiatives and earnings management, an area of importance to all stakeholders in a market with increasing interest in corporate environmental performance and its implications.
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Monika Sheoran and Divesh Kumar
The consumption patterns of humanity are putting an enormous burden on the resources, which are beyond the fulfiling capacity of the earth. These consumption patterns need to be…
Abstract
Purpose
The consumption patterns of humanity are putting an enormous burden on the resources, which are beyond the fulfiling capacity of the earth. These consumption patterns need to be made sustainable. Therefore, this study aims to focus on identifying the key enablers driving the sustainable consumer behaviour.
Design/methodology/approach
Based on the literature review of 107 studies (1995 to 2018), which were published over a period of 23 years, fourteen key enablers of sustainable consumer behaviour were identified. These 14 enablers were validated with the help of empirical research done by surveying 200 consumers of electronic products. This was followed by the application of interpretive structural modelling (ISM) technique, to get an insight into how these enablers are influencing sustainable consumer behaviour.
Findings
ISM technique and empirical research aided in classifying the enablers based on their driving and dependence power. A further analysis was done to know about the contextual relationship between all 14 enablers and how these enablers are influencing each other and sustainable consumer behaviour. Attitude, subjective norm and perceived controlled behaviour were found dependent variables while education, government policy and advertisement emerged as an autonomous variable.
Research limitations/implications
This study will be helpful for future research in the field of sustainable consumer behaviour. Through understanding of the enablers of sustainable consumer behaviour, a scale can be developed having significant theoretical and managerial implications. This study may help in improving the sustainability initiatives by various stakeholders involved in the process of purchase, usage and dispose of electronic products.
Originality/value
This study is the first temporal and spatial study, which includes a holistic view of the enablers of sustainable consumer behaviour.
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Conor O’Leary, Errol Iselin and Divesh Sharma
Internal control evaluation is a critical component of the overall audit process, mandated by auditing standards worldwide. These standards divide internal control structures into…
Abstract
Internal control evaluation is a critical component of the overall audit process, mandated by auditing standards worldwide. These standards divide internal control structures into a number of elements, summarised as the control environment, information systems, and control procedures. Significant research exists as to auditors’ evaluations of internal controls. However, little work appears to consider the elements’ inter‐actions and relative significance. This study attempts to gauge the relative importance external auditors assign to the three elements. 94 practicing auditors evaluated internal control structures in two fictitious companies, one with strong internal control elements throughout, the other with one of the three set at a lower reliability level. The results indicate auditors consider control environment the most important element of internal control. The effect of weakening this element was that auditors assessed all three elements and overall evaluation as less reliable. Varying the other two elements did not have such significant effects. The findings carry ramifications for the auditing profession, particularly in drafting auditing standards on risk assessment.
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Monika Sheoran and Divesh Kumar
The earth is under massive stress due to current level of consumption which has crossed the sustaining capacity of our planet. Thus, the need of the hour is to promote sustainable…
Abstract
Purpose
The earth is under massive stress due to current level of consumption which has crossed the sustaining capacity of our planet. Thus, the need of the hour is to promote sustainable production and consumption. The purpose of this study is to identify the basic barriers of sustainable consumer behaviour which are hindering the adoption of sustainable consumption.
Design/methodology/approach
This article is divided into two parts. The first part consists of a literature review based on 128 articles (1995 to 2020), which are spread over a period of 25 years. Based on the literature review, nine barriers of sustainable consumer behaviour were identified and put into three categories. In the second part, fuzzy analytical hierarchy process has been used to know about the relative weight of each barrier so that benchmarking/prioritising of basic barriers of sustainable consumer behaviour can be done.
Findings
This article identifies critical barriers affecting the acceptance of sustainable electronic products. High price, a perception of no environmental impact, no benefit in personal image, lesser use by family and friends, lack of awareness about the products etc. emerged as the potential barriers which need prime attention. The relative weight of each of these barriers has also been arrived at in this article which is expected to be beneficial for policymakers to focus upon important barriers. Impact of many of these barriers can be reduced through innovative approaches and solutions.
Research limitations/implications
This article will be helpful in future research in the field of sustainable consumer behaviour. Through the understanding of the barriers of sustainable consumer behaviour, companies, governments and industries can take suitable initiatives by modifying the policies and practices to reduce the impact of these barriers so that consumer behaviour can be made more sustainable.
Originality/value
The current article tries to identify the critical barriers to adoption of sustainable electronic products by the consumers. An extensive literature review, expert suggestions and consumer survey have been adopted to identify nine barriers. Although, multiple researches have been done in the field of sustainable consumer behaviour and adoption of sustainable electronic products, there is no research article which solely focuses on implementing Fuzzy analytical hierarchical process (AHP) approach to rank the barriers faced by consumers for adoption of sustainable electronic products. It has been concluded that high price of sustainable electronic products is the most critical barrier in adoption of sustainable consumer behaviour. Moreover, the relative ranking obtained with the help of Fuzzy AHP can be used by policymakers and organisations to promote and implement sustainability in consumer behaviour.
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The purpose of this paper is to investigate whether corporate governance structures influence the audit process in terms of audit fee pricing for regulated companies.
Abstract
Purpose
The purpose of this paper is to investigate whether corporate governance structures influence the audit process in terms of audit fee pricing for regulated companies.
Design/methodology/approach
The paper first reviews prior literature and identifies factors within the categories of client size, audit risk, audit complexity, auditor‐related issues and corporate governance characteristics that are likely to influence audit fees of banking clients. It then regresses these variables on audit fees using an ordinary least square regression model for a sample of US listed bank holding companies (BHC).
Findings
The paper finds no significant association between most corporate governance variables and audit fees, suggesting that governance agents do not require additional assurance from the auditor, given close oversight by regulators. It also observes a negative association between audit committee independence and audit fees, implying that auditors reduce their effort and thus audit fees in the presence of an independent audit committee because they perceive that such committees reduce control and financial reporting risks.
Originality/value
In contrast with prior findings based on non‐regulated companies, governance agents in regulated companies such as BHC do not demand a more extensive audit. This reflects a substitution effect of regulatory oversight for internal governance monitoring. The paper also shows that BigN auditors modify their audit strategies in response to corporate governance mechanisms. Modifying audit strategies in accordance with the strength of governance mechanisms is consistent with recommendations in professional standards and would enable auditors to address risks more appropriately, thereby increasing audit quality and efficiency.
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Monika Sheoran and Divesh Kumar
This article attempts to explore the theoretical model and structural dimensions of sustainable consumer behaviour to develop a “sustainable consumer behaviour scale” for…
Abstract
Purpose
This article attempts to explore the theoretical model and structural dimensions of sustainable consumer behaviour to develop a “sustainable consumer behaviour scale” for sustainable electronic products. Further, this study has tried to elaborate sustainable consumer behaviour by considering the complete consumption cycle which includes purchase, usage and disposal of the sustainable electronic products.
Design/methodology/approach
The theory of planned behaviour (TPB) has been employed to understand the multidimensional nature of sustainable consumer behaviour with the help of qualitative and quantitative methods. With the help of a pilot study followed by a main study, a sustainable consumer behaviour scale for sustainable electronic products has been tested and validated for its factor study, reliability, validity and model fit, etc. Moreover, the influence of demographic variables has also been examined with the help of multi-group analysis.
Findings
This study highlights that the perceived control behaviour and subjective norms are the major factors that influence sustainable consumer behaviour. Moreover, the results also indicate that female consumers, mid income consumers, young consumers (age below 30) and consumers who have studied up to senior secondary level are more sustainable.
Research limitations/implications
The results can be used by policymakers and managers to identify and target particular subjective norms and factors impacting perceived control behaviour along with a specific set of demographics to increase sustainability amongst consumers and businesses. The results of the current study can help in increasing the focus of the academic research towards sustainable consumer behaviour. It will also encourage firms to include sustainable electronic products in their product line.
Originality/value
To the best of authors' knowledge, the current article is the first empirical study to develop a sustainable consumer behaviour scale by including all the different stages of the consumption cycle using TPB for sustainable electronic products. Although multiple efforts have been made by researchers to analyse sustainable consumer behaviour, there is a scarcity in literature in which research has been done to analyse sustainable consumer behaviour by considering the whole consumption cycle (purchase, usage and disposal).