Praveen Kumar and Mohammad Firoz
The purpose of this paper is to analyse the certified emission reduction (CERs) disclosure and reporting practices followed by Indian firms.
Abstract
Purpose
The purpose of this paper is to analyse the certified emission reduction (CERs) disclosure and reporting practices followed by Indian firms.
Design/methodology/approach
The study is based on all 131 Indian firms who received the CERs under the CDM of UNFCCC. The content analysis is being used to examine the recognition, measurement, presentation and disclosure of CERs within the financial statements.
Findings
The study found that there is generally no uniformity of accounting for CERs. The firms adopted a diversity of accounting practices. More specifically, majority of companies (40.46 per cent) recognised CERs as the other income; a very high non-disclosure rate (91.60 per cent) for valuation of CERs inventories was found as only four companies (3.05 per cent) provided accounting treatment for CERs inventories at lower of cost or net realisable value followed by three companies (2.29 per cent) accounted for these inventories at Net realisable value at the end of the reporting period; similarly, a very high non-disclosure rate (92.36 per cent) for how companies account for expenses incurred in earning these credits was found.
Research limitations/implications
The study will be useful for a wide array of audiences ranging from accounting standard setter to the auditors. The present analysis is based on secondary data, as we examined only annual reports of the sample companies to know how they recognise their earned CERs within the financial statements. So, we did not cover the opinions of various key persons of companies like an accountant, auditors etc. which could be a limitation of this study in validating CERs disclosure practices followed by the Indian firms.
Originality/value
To the best of the author's knowledge, the present study is a first of its kind to analyse the carbon credit disclosure practices in the context of a developing country.
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Praveen Kumar and Mohammad Firoz
The purpose of this paper is to analyze the relationship between Certified Emission Reductions (CERs) information and a firm’s stock prices.
Abstract
Purpose
The purpose of this paper is to analyze the relationship between Certified Emission Reductions (CERs) information and a firm’s stock prices.
Design/methodology/approach
The present study is based on 193 CERs announcements by Indian firms over a 13-year period 2005–2017. The event study methodology is used to examine the impact of CERs announcements on a firm’s share prices.
Findings
The study suggests that the issuance of CERs did not produce any significant abnormal return. More specifically, the outcomes of event study shows that over a two-day event window from the event day to the day after the event (i.e. days 0 to 1), the mean and median of AARs are −0.25 and −0.34 percent, respectively. The abnormal returns on day 1 are not statistically significant as per the t-test. Moreover, the mean and median of abnormal returns after one day (−1) are negative, indicating that investors react negatively to CERs announcements. However, the mean and median of CAARs over both the two-day (i.e. days −1 to 0 and days 0 to +1) and three-day (i.e. days −1 to +1) event windows are positive, but not statistically significant based on the t-test.
Research limitations/implications
The findings of the study are quite comprehensive, relatively used only market-based criteria of a firm’s financial performance, e.g., share price, at times, inhibits generalizing the results.
Originality/value
To the best of the author’s knowledge, the present study is a first of its kind to investigate the relationship between the CERs information and a firm’s stock prices.
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Praveen Kumar and Mohammad Firoz
The purpose of this paper is to analyze the relationship between carbon emissions and a firm’s cost of debt (COD) in the Indian context.
Abstract
Purpose
The purpose of this paper is to analyze the relationship between carbon emissions and a firm’s cost of debt (COD) in the Indian context.
Design/methodology/approach
The present study is based on the Indian firms who disclose their emissions data under the Carbon Disclosure Project (CDP) during the period 2011 to 2014. The selection model is being used to remove the problem of endogeneity and sample selection bias. Further, the testing model is being used to examine the impact of carbon emissions on the COD.
Findings
The present study found that the coefficient of carbon emissions is positively and significantly associated with the COD. Moreover, the outcomes of the robustness test further show that the COD will be higher for polluting firms than environmentally friendly firms in India.
Research limitations/implications
The study has covered all the companies from India who are disclosing their emissions data under the CDP, London. The study will be most relevant for financial planning and capital structure design by the Indian companies. However, in designing the capital structure, the only COD is being covered in this study.
Originality/value
To the best of the author’s knowledge, the present study is a first of its kind to investigate the relationship between firms’ carbon emissions level and COD in the Indian context.
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R. Saravanan, Firoz Mohammad and Praveen Kumar
The purpose of this study is to investigate the influence of IFRS convergence on annual report readability in an emerging market context, with an emphasis on the contents of…
Abstract
Purpose
The purpose of this study is to investigate the influence of IFRS convergence on annual report readability in an emerging market context, with an emphasis on the contents of management discussion and analysis (MD&A), notes to the accounts (Notes) and the whole annual report.
Design/methodology/approach
The study performs firm-fixed effect regression on a sample of 143 Indian listed companies over a period spanning from 2012 to 2021 to examine the influence of IFRS convergence on readability. This assessment primarily focuses on broader spectrums of readability dimensions, namely annual report length and complexity, wherein complexity is measured using the Gunning Fog, Flesch Reading ease and Flesch-Kincaid grade index.
Findings
As Indian firms shift to IFRS reporting, the findings suggest that annual reports have become significantly lengthier and more complex, causing deterioration in readability. The Notes section, in particular, exhibits the most significant increase in length and complexity, followed by the entire annual report and MD&A section. Furthermore, the findings also indicate that the complexity of the Notes section is instrumental in the observed complexity growth of the whole annual report in the post-IFRS period.
Research limitations/implications
The current study employs readability indices rather than directly taking into consideration the opinions of actual users of annual reports to determine readability. As a result, the study does not provide direct evidence on how information in annual reports affects users' readability.
Practical implications
The findings provide insightful information to managers and policymakers about the difficulties stakeholders may encounter while reading IFRS-based annual reports, which ultimately impact their investment decisions. Thus, there is an important managerial implication from this, depending upon the severity of complexity corporations participate in while complying with IFRS in the post-IFRS period.
Originality/value
Analyzing the influence of exogenous information shock, such as IFRS convergence, on readability is critical, particularly for emerging markets like India, where a lack of financial literacy and weaker enforcement already have detrimental effects on the capital market. In light of this, the current study provides a comprehensive examination of the impact of IFRS convergence on annual report readability and contributes to the growing IFRS literature in the less explored emerging market context.
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Shelly Gupta and Firoz Mohammad
The purpose of the study is to investigate the relationship between the big five personality traits and personal financial planning (PFP) by focusing on the mediating role of…
Abstract
Purpose
The purpose of the study is to investigate the relationship between the big five personality traits and personal financial planning (PFP) by focusing on the mediating role of mental accounting among Indian service sector employees.
Design/methodology/approach
The present study used a data set comprising 649 valid responses obtained through the structured questionnaire that was specifically disseminated to employees working in the Indian service sector. Further, the study used a quantitative approach, partial least squares structural equation modeling, to examine the hypothesized relationship.
Findings
The study’s outcomes reveal that mental accounting completely mediates the relationship between conscientiousness and PFP. In addition, extraversion and neuroticism traits have directly influenced the PFP, but in the presence of mental accounting, these traits have partially influenced the PFP. Furthermore, the results suggest that agreeableness directly affects PFP, whereas openness does not demonstrate any significant influence.
Originality/value
The existing literature within the field of PFP has primarily focused on exploring various variables associated with mental accounting, such as monetary and time costs, mental budgeting process and tax liabilities. However, it has overlooked the potential mediating effect of mental accounting. This study bridges this gap by investigating the impact of mental accounting as a mediator in the relationship between personality traits and PFP. Moreover, recently, the Indian economy has undergone major overhauls especially due to enactment of Goods and Services Tax and the profound impact of COVID-19, leading to changes in financial behavior of individuals. Therefore, this study endeavors to shed light on the emerging dynamics within the PFP domain, particularly within the context of the newly accustomed economic circumstances in India.
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Renu Devi, Mohammad Firoz and R. Saravanan
This study aims to investigate redundant information in mandatory non-financial reports (NFRs) demanded by regulators, focusing primarily on overlapping disclosures in a new…
Abstract
Purpose
This study aims to investigate redundant information in mandatory non-financial reports (NFRs) demanded by regulators, focusing primarily on overlapping disclosures in a new Indian sustainability reporting (SR) framework.
Design/methodology/approach
The study sample comprised NIFTY100 listed entities that published SR voluntarily during 2021–2022. The authors used content analysis and cosine similarity techniques to conceptually compare redundancy in SR disclosures with non-financial disclosures.
Findings
The findings reveal an information overlap in SR disclosure with other NFRs disclosures. The disclosures of Directors’ Report have higher cosine similarity scores at the firm level with SR, followed by the Management Discussion and Analysis report, Corporate Governance report and Corporate Social Responsibility report. The additional analysis reveals that qualitative disclosures and disclosures comprising governance factors overlap more in SR.
Practical implications
Policymakers should look to establish relevant disclosure guidelines in the SR system, and thereby, shed light on fundamental issues to enhance future SR framework reforms.
Social implications
The study highlight the need for integration and amendment in the disclosure guidelines of NFRs to improve the overall transparency of the reports.
Originality/value
Previous studies have examined the redundancy in annual reports and SRs from the point of view of overlapping information. To the best author’s knowledge, this is possibly among the first studies to offer insights into the repetition of disclosures required by regulators in statutory NFRs based on environmental, social, and governance factors through the lenses of the institutional theory.
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Saravanan R., Mohammad Firoz and Sumit Dalal
This study aims to empirically investigate the effect of International Financial Reporting Standards (IFRS) convergence on corporate risk disclosure, with a particular emphasis on…
Abstract
Purpose
This study aims to empirically investigate the effect of International Financial Reporting Standards (IFRS) convergence on corporate risk disclosure, with a particular emphasis on the quantity and coverage of risk information. The research also conducts economic benefit and cost analysis to investigate the economic implications that may arise from the transition to IFRS reporting.
Design/methodology/approach
A content analysis approach is used to measure two broader dimensions of risk disclosure, namely, risk disclosure quantity and risk topic coverage. Furthermore, using firm-fixed effect regression on a sample of 143 Indian-listed companies, this study investigates the variations in these risk disclosure dimensions before (2012–2016) and subsequent to (2017–2021) the convergence with IFRS.
Findings
The empirical results of this research demonstrate that IFRS convergence has led to a significant improvement in firms’ risk disclosure across several dimensions. Particularly, during the post-IFRS period, firms’ usage of risk-related words and sentences has considerably surged in MD&A, Notes and whole annual reports. In addition, upon IFRS convergence, firms’ risk descriptions have become more extensive and evenly distributed across risk topic categories. Moreover, the in-depth benefit and cost analysis revealed that firms reporting under IFRS benefit from decreased cost of equity capital, but they also incur a higher cost of audit fees.
Originality/value
This study contributes to the literature in two ways. First, this is the only study, to the best of the authors’ knowledge, to conduct a broader examination of the impact of mandatory IFRS convergence on corporate risk disclosure, with a major focus on quantity and coverage of risk information. Second, by conducting economic benefit and cost analysis, this study provides novel insights into the critical role of IFRS risk disclosures toward multiple economic outcomes.
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Saravanan R. and Mohammad Firoz
This study aims to investigate the effects of IFRS convergence on market liquidity and to analyze the firm-level heterogeneity in liquidity effects based on reporting incentive…
Abstract
Purpose
This study aims to investigate the effects of IFRS convergence on market liquidity and to analyze the firm-level heterogeneity in liquidity effects based on reporting incentive, firm size, ownership structure and firm leverage.
Design/methodology/approach
The empirical analysis is based on firm-fixed effect regression using several proxies of market liquidity as dependent variables. The sample consists of 337 firms listed on the National Stock Exchange (NSE) who shifted to IFRS from the financial year 2016–2017.
Findings
The empirical findings indicate that IFRS convergence has contributed to the significant increase in market liquidity in a weaker enforcement country, i.e. India. Additionally, when the study performs the heterogeneity test of IFRS impact, the results indicate the presence of significant cross-sectional differences in such liquidity effects across firms. Thus, altogether the findings suggest that both accounting convergence and firm-level factors are likely to be the mechanism underlying the observed improvement in market liquidity.
Originality/value
In the current literature, there is an ongoing debate about whether the observed post-IFRS effects are driven by the change in accounting standard per se or by other related factors. Therefore, by studying the liquidity effects of IFRS convergence in India, this study provides evidence regarding the sources of the documented IFRS effects. Moreover, the study indicates the significance of firm-level factors in determining the observed liquidity outcomes around IFRS adoption, which is unique to the literature.
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The purpose of this paper is to analyze the preparations carried out by the Indian banking industry for the implementation of the International Financial Reporting Standards on…
Abstract
Purpose
The purpose of this paper is to analyze the preparations carried out by the Indian banking industry for the implementation of the International Financial Reporting Standards on and after 1 April 2011.
Design/methodology/approach
The paper is based upon the critical analysis of the financial statements of the Indian banking industry and the relevant provisions of IFRS and other relevant laws applicable for the Indian banking industry.
Findings
The main finding of this paper is that the Indian banking industry is preparing according to the target for convergence from 1 April 2011, but amendments in the various statutory laws of India are yet to be implemented/approved by the government.
Research limitations/implications
This paper covers only the Indian banking industry and excludes all other industries in India.
Originality/value
This paper shows the areas in which the Indian banking industry is required to focus before and after the implementation of IFRS, and their consequences on the financial statements of the bank.
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Mohammad Jamal Khan, Shankar Chelliah, Firoz Khan and Saba Amin
This study aims to investigate the moderating effect of travel motivation on the relationship between perceived risks, travel constraints and visit intention of young women…
Abstract
Purpose
This study aims to investigate the moderating effect of travel motivation on the relationship between perceived risks, travel constraints and visit intention of young women travelers.
Design/methodology/approach
A quantitative study was performed, and data were collected from 416 female university students using convenience sampling. Structural equation modeling with partial least square approach was used to test the research hypotheses.
Findings
The findings revealed that travel motivation has a moderating effect by weakening the negative relationships between physical risk, structural constraints and visit intention.
Practical implications
The findings of this study provide useful insights for destination managers about the influence of travel motivation on the behavioral intention of young women travelers in the case of higher perceptions of travel risks and constraints.
Originality/value
Literature has discussed the intervening role of travel motivations in different contexts. However, studies are scarce in examining the effect of travel motivation in weakening the negative influence of high perceptions of risks and constraints on intention to visit.