Ana Isabel Morais and Inês Pinto
In 2009, the International Accounting Standards Board started revising International Accounting Standard (IAS) 19 to improve the requirements for managing the annual expense of a…
Abstract
Purpose
In 2009, the International Accounting Standards Board started revising International Accounting Standard (IAS) 19 to improve the requirements for managing the annual expense of a pension plan. The revised standard became effective in 2013. The purpose of this paper is to investigate what effect this revision had on managerial discretion. The paper also examines the implications of the revision on the value relevance of accounting information.
Design/methodology/approach
The authors use a sample of 72 firms listed on the FTSE 100 that have defined benefit plans for the period between 2009 and 2015. The authors use a regression discontinuity design to analyse the effect from the revision of IAS 19 on the choice of managers regarding the expected rate of return-on-plan assets. The paper also investigates whether firms with higher pension sensitivity are more likely to manage earnings upward before the revision of IAS 19. Further, the paper studies the value relevance of earnings after the revision of the accounting standard.
Findings
Consistent with predictions, the results show that the adoption of the revised IAS 19 limits the use of the expected rate of return on assets to manage the annual expense of defined benefit plans. This finding shows a sharp increase in the value relevance of earnings.
Practical implications
This finding is useful for users and preparers of financial statements and regulatory bodies as it identifies not only the influence of a change in the accounting standard for earnings management but also provides evidence on the consequences of managers’ discretion.
Originality/value
This paper provides direct evidence on the relationship between regulation and financial reporting discretion. It also provides evidence to accounting standard setters that the revision of IAS 19 improves the value relevance of financial information, which gives additional justification to the changes introduced by regulators.
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Inês Pinto, Cristina Gaio and Tiago Gonçalves
The purpose of this paper is to investigate the role of corporate governance mechanisms and foreign direct investment (FDI) to restrain or stimulate the use of loan loss…
Abstract
Purpose
The purpose of this paper is to investigate the role of corporate governance mechanisms and foreign direct investment (FDI) to restrain or stimulate the use of loan loss provisions (LLPs) by managers to smooth earnings in African banks.
Design/methodology/approach
This study uses a sample of 112 listed and non-listed banks from 20 African countries, covering the period 2011–2017. Models are estimated using the pooled ordinary least squares regression, as well as Blundell and Bond (1998) system GMM.
Findings
The results suggest that bank managers use LLPs to reduce income volatility and that ownership concentration increases income smoothing. The findings also show that FDI plays a fundamental role to restrain managerial discretion in developing countries, increasing corporate governance practices in the host country.
Practical implications
These findings are relevant for banking regulators and supervisors in order to determine which corporate governance mechanisms can be used in developing countries to increase the quality of financial reporting. A policy model that promotes FDI boosts financial reporting transparency, contributing to greater financial markets development.
Originality/value
The authors extend the existing literature on the influence of corporate governance mechanisms in limiting managerial discretion by focusing on the role that foreign shareholders may have in disciplining banks financial reporting quality in countries with weak institutional quality.
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The purpose of this paper is to examine the role of state ownership on financial reporting quality regarding the characteristics of conservatism and earnings management.
Abstract
Purpose
The purpose of this paper is to examine the role of state ownership on financial reporting quality regarding the characteristics of conservatism and earnings management.
Design/methodology/approach
Using a large sample of public and private European firms during the period 2003-2010, the authors test the hypotheses following Ball and Shivakumar’s (2005) model for conservatism and the modified Jones (1991) model proposed by Dechow and Sloan (1995) for earnings management. To ensure that the results are robust, the authors conduct sensitivity analysis with regard to potential endogeneity and selection bias.
Findings
The authors find that state-owned firms are less conservative than non-state-owned firms, which is consistent with the idea that there is less need for accounting conservatism due to government protection. The authors also show that capital markets play an important role in shaping the relation between state ownership and earnings management. Among public firms, the authors find that state-owned firms have higher abnormal accruals and worse accruals quality than non-state-owned firms, which suggests that state-owned firms are not immune to capital market pressures.
Research limitations/implications
The study has two limitations. First, as state-owned and non-state-owned firms face quite different incentive structures, management behavior might be determined by factors that have yet to be identified. Second, prior research results suggest an inverted U-shape relation between ownership concentration and earnings management (Ding et al., 2007). It would be interesting to investigate the impact of different levels of state ownership on earnings quality.
Practical implications
As the paper investigates the role of state ownership on earnings quality using a sample of European firms, it brings new insights regarding the role of state ownership in accounting quality and firm performance. In addition, it considers the role of capital markets in the relation between the quality of financial reporting and ownership by considering a sample with both public and private firms.
Originality/value
The study contributes to the debate about state intervention in the corporate sector, by extending the knowledge of the effects of government ownership on earnings quality by using a large sample of European firms. Furthermore, the authors also introduce the effect of capital market forces on managers’ behavior in state-owned and non-state-owned companies by analyzing private and publicly listed firms.
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Inês Pinto and Manuel Caldeira Pais
Profiting from a unique research opportunity in the Portuguese REIFs market, this paper aims to investigate the impact of fund managers ' accounting choice on…
Abstract
Purpose
Profiting from a unique research opportunity in the Portuguese REIFs market, this paper aims to investigate the impact of fund managers ' accounting choice on funds ' returns distribution and analyses the relationship between fair value accounting choice and conditional accounting conservatism.
Design/methodology/approach
According to Portuguese securities market regulation, fund managers of REIFs can fix the value of the fund properties between the acquisition cost and the average of the appraisal values assigned periodically by two independent appraisers. Therefore, through the analysis of fund managers’ actual choice to value REIF net asset value in comparison with a mandatory adoption of a pure fair value method (appraisers’ valuations), the paper investigates the impact of accounting choice on funds’ return series. On the other hand, an analysis at fund level is also conducted to determine the consequences of fair value accounting choice on the ability of fund managers in delaying the recognition of asset value decreases (bad news).
Findings
Results indicate that in the period of financial crisis, significant differences in REIF returns according to the accounting method used to value properties are observed. There is also evidence that fund managers of open-end funds that are subject to greater market pressure to meet financial reporting objectives are more likely to smooth book value returns. Additionally, findings support the hypothesis that REIFs that use a more historical cost accounting model exhibit a lower degree of conditional accounting conservatism, suggesting that the use of fair value may be useful to reduce fund manager discretion in delaying the recognition of losses.
Originality/value
This paper provides an empirical evidence of one possible positive effect of the use of fair value on the quality of financial reporting, evidencing how a more fair value accounting model may limit fund managers’ discretion.
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Milena Carvalho, Michael Boock, Tania Yordanova Todorova, Susana Martins, Ines Braga and Cláudia Pinto
Surveying authors at doctoral-granting institutions of higher education in Portugal, the authors in this paper aim to seek to determine the extent to which Portuguese researchers…
Abstract
Purpose
Surveying authors at doctoral-granting institutions of higher education in Portugal, the authors in this paper aim to seek to determine the extent to which Portuguese researchers prefer that their work appears in open access journals or open access repositories resulting in improved access to quality, peer-reviewed scientific information and faster scientific and technological advances. The authors also seek to gauge Portuguese author's familiarity with open access, the importance they attach to open access when choosing a publication outlet, and to determine their preferences for achieving open access.
Design/methodology/approach
The methodology adopted in this research is the case study. The case study intends to understand a complex social phenomenon through an in-depth study holistically. In May 2020, the authors distributed a survey to faculty in all academic ranks at 14 Portuguese higher education institutions to learn the extent to which Portuguese authors currently make their research openly available, ascertain their awareness of open access, their support of the European Union (EU) open access goal and their preferences for achieving open access.
Findings
Researchers at Portuguese universities overwhelmingly are aware of arguments in favor of open access and believe that open access benefits researchers in their fields. Portuguese researchers regularly publish in open access journals and deposit their papers in institutional or disciplinary repositories.
Research limitations/implications
16.7% of 740 potential respondents completed the survey. The relatively low response rate prevents extrapolations from being made to the universe. The study was implemented during the COVID-19 pandemic, which, due to the disruption created in all sectors, made data collection complex and delayed its subsequent treatment.
Originality/value
Similar studies have been conducted at individual universities and in particular disciplines to determine the degree to which their faculty authors are aware of open access, its benefits, and preferences for achieving it. A similar study of Bulgarian university authors was conducted in 2018. No previous study of Portuguese authors at institutions of higher education has been conducted. The results will be useful to Portuguese institutions of higher education and academic libraries to establish and revise open access outreach and implementation services that may be helpful to their faculty in meeting EU open access and funder open access requirements.
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Md Rabiul Islam, Sandra Maria Correio Loureiro, Inês Carvalho and Ana Ramires
This study proposes a conceptual model and aims (1) to understand how co-creation experience influences guest engagement, (2) to analyse the effect of satisfaction and affective…
Abstract
Purpose
This study proposes a conceptual model and aims (1) to understand how co-creation experience influences guest engagement, (2) to analyse the effect of satisfaction and affective image between co-creation experience and guest engagement, and (3) to analyse the effect of guest engagement on behavioural intentions.
Design/methodology/approach
A questionnaire-based online survey was conducted targeting U.S.-based hotel customers. Developed on Qualtrics and distributed via Mechanical Turk, the survey garnered 465 useable responses from individuals who had visited international chain hotels within the last year. Data analysis was performed using Structural Equation Modelling (SEM) in IBM SPSS Amos.
Findings
The findings revealed significant direct effects of co-creation experience on affective image and guest satisfaction, with guest satisfaction notably influencing guest engagement, and guest engagement directly influencing behavioural intention. However, both co-creation experience and affective image showed minimal direct impact on guest engagement. The study also highlighted the importance of indirect effects and total effects in understanding the dynamics between the constructs analysed.
Research limitations/implications
The findings revealed significant direct effects of co-creation experience on affective image, with affective image notably influencing guest engagement, and guest engagement directly influencing behavioural intention. Although satisfaction had direct effects on guest engagement, co-creation experience showed minimal direct impact on guest satisfaction and on guest engagement.
Practical implications
This study advises managers to use co-creation primarily to enrich guest experiences and establish emotional connections rather than as a tool for directly enhancing engagement. It recommends that managers invest in strategies to enhance guest engagement beyond co-creation given the direct link between guest engagement and behavioural intentions, and the minimal direct impact between co-creation, guest engagement and satisfaction.
Originality/value
This study demonstrates that affective image is a pivotal mediator between co-creation experience and guest engagement. The findings provide valuable implications for hospitality practitioners in designing and managing co-creation experiences, emphasizing the importance of fostering a positive affective image in the value co-creation process to attain positive behavioural outcomes.
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Carla Lousas, Humberto Ribeiro, Sandra Alves and Cláudia Veloso
Since the dawn of the civilizations that olive has been playing a critical role on both the society and the economy. Indeed, one can argue that olive and olive oil were as…
Abstract
Since the dawn of the civilizations that olive has been playing a critical role on both the society and the economy. Indeed, one can argue that olive and olive oil were as critical as they shaped a form of culture, a seminal pillar that supported the Mediterranean civilizations and that has since then spread worldwide, influencing others. As waves and tides, the use of olive and olive oil has certainly met low points, to the extent that its use even became to be considered old fashioned more recently, when the traditional Mediterranean food and culture started to be jeopardized by very different modern ways of living. Nevertheless, despite defying challenging conditions, stubbornly as always, the Mediterranean diet not only continues to prevail, but keeps granting the admiration of diverse strands of the society and science, being notoriously evident the set of recent research that points to its health benefits, having olive oil as the cornerstone, a vegetable fat, considered to be highly healthy, as it enhances the control of important health indicators, such as the bad cholesterol, serving for nutritional and therapeutic uses, and preventing the occurrence of a number of diseases, including cardiovascular problems and some forms of cancer.
Taking into consideration this framework, the research presented in this book is focused on the examination of the main trends on olive and olive oil in the Iberian Peninsula, from production to retail and consumption, by analyzing several data sets covering recent decades. In terms of findings for more recent years, it was possible to conclude that despite the increasing recognition of the benefits of olive and olive oil by the society, and despite the increase in olive production, the consumption of olive oil has been decreasing internally, being replaced by increases in exports. This is most probably due to the economic conditions that have deteriorated due to the 2008’s financial crisis, which, together with an increase in olive oil prices, has prevented a considerable portion of the population to have financial conditions to access to the consumption of such an important component of the Mediterranean diet.
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This chapter seeks to describe the successive stages in the training and recruitment of economists at the service of the political regime that ruled over Portugal between 1926 and…
Abstract
This chapter seeks to describe the successive stages in the training and recruitment of economists at the service of the political regime that ruled over Portugal between 1926 and 1974. This chapter presents the main institutional settings for the education and practices of those who served the government in economic functions throughout this period. Its main aim is to show the changes that occurred in the understanding of the problems related with the development of the Portuguese economy, seeking to elucidate the processes of legitimation of an authoritarian regime, but also to show the signs of a critical break with a model of economic and social organization and a political regime that had reached the point of exhaustion.
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José Manuel Mendes, Alexandre Oliveira Tavares and Pedro Pinto Santos
The purpose of this paper is to present a new index of social vulnerability (SV), based on local level data [statistical blocks (SBs)]. This same methodology was applied before at…
Abstract
Purpose
The purpose of this paper is to present a new index of social vulnerability (SV), based on local level data [statistical blocks (SBs)]. This same methodology was applied before at the municipal level, which is a level of analysis that under-evaluates local spots of high SV, by one side, and generalizes the coverage of support capacity equipment and infrastructure. The geographical level of detail of the input data allows to overcome those limitations and better inform infra-municipal risk practitioners and planners.
Design/methodology/approach
The assessment of SV in this paper adopts an inductive approach. The research context of this conceptual and methodological proposal derived from the need to operationalize the concept of SV as a planning tool. This approach required to distinguish between the components of criticality and support capability, as their assessment provides knowledge with distinct applications in risk management. The statistical procedure is based on principal components analysis, using the SB as the unit of analysis.
Findings
Support capability acts as a counter-weight of criticality. This understanding is well illustrated in the mapping of each component and the final score of SV. The methodological approach allowed to identify the drivers of criticality and support capability in each SB, aiding decision-makers and risk practitioners in finding the vulnerability forcers that require more attention (public or private social equipment, housing policies, emergency anticipatory measures, etc.).
Originality/value
An original approach to SV assessments is the consideration of the components of criticality and support capability. The results allow for the definition of adapted and specific strategies of risk mitigation and civil protection measures to distinct types of risk groups and by different stakeholders and risk practitioners. By predicting the impact and the recovery capacity of communities, the results have applicability in several fields of risk governance as, for example, risk communication and involvement, social intervention (health, education and housing), emergency response, contingency planning, early warning and spatial planning.
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Anna Białek-Jaworska, Agnieszka Teterycz, Ricardo Sichel and Michał Woźniak
This paper aims to verify how the intellectual property (IP) box affects firms’ effective tax rate, growth and innovation activity outcomes related to intellectual property rights.
Abstract
Purpose
This paper aims to verify how the intellectual property (IP) box affects firms’ effective tax rate, growth and innovation activity outcomes related to intellectual property rights.
Design/methodology/approach
Implementing the innovation box regimes into the tax system intends to encourage firms to engage in more innovative activities. In UK, Italy and Poland, the IP box tax relief was introduced in 2013, 2015 and 2019, respectively. In return, companies may reduce their tax rate to increase their investment and innovativeness. With a panel model approach – system GMM and DiD with multiple time periods – it analyses data from the Orbis database for 2011–2019 of 673 firms from the gaming industry in 11 countries and hand-collected data on intellectual property rights protection. The authors study public and private companies from the gaming sector in leading European markets and all three countries that protect intellectual property rights of software (Japan, South Korea, the USA).
Findings
Recent reforms enable gaming companies to use preferential tax treatment for IP-related income and significantly impact a firm’s revenue growth.
Practical implications
Nevertheless, European gaming firms require time to leap the gap to the growth and innovativeness of countries that protect software.
Originality/value
The authors show that the IP box stimulates gaming firms to protect IP via wordmarks, figurative marks, trademarks and software patents that bring effects in five years. Despite the critics against IP box, the authors prove its lagged efficiency, especially in profitable and larger firms.