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Article
Publication date: 1 March 2006

Graeme Wines

This experimental study investigates the connotative (measured) meaning of the concept “auditor independence” within three audit engagement case contexts, including two…

812

Abstract

This experimental study investigates the connotative (measured) meaning of the concept “auditor independence” within three audit engagement case contexts, including two acknowledged in the literature to represent significant potential threats to independence. The study’s research design utilises the measurement of meaning (semantic differential) framework originally proposed by Osgood et al. (1957). Findings indicate that research participants considered the concept of independence within a two factor cognitive structure comprising “emphasis” and “variability” dimensions. Participants’ connotations of independence varied along both these dimensions in response to the alternative experimental case scenarios. In addition, participants’ perceptions of the auditor’s independence in the three cases were systematically associated with the identified connotative meaning dimensions.

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Pacific Accounting Review, vol. 18 no. 1
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 19 July 2011

Tony Mortensen and Richard Fisher

The purpose of this paper is to explore the impact on communication of changes in an accounting standard arising from the transition to International Financial Reporting…

1857

Abstract

Purpose

The purpose of this paper is to explore the impact on communication of changes in an accounting standard arising from the transition to International Financial Reporting Standards. It investigates inter and intragroup differences in measured connotative meaning of the old and new definitions of “cash”, as held by three key groups of parties to the accounting communication process (preparers, auditors and users); and determines the effect of changes in connotative meaning on decision behaviour (outcomes).

Design/methodology/approach

The study adopted a between‐participants 2×3 factorial design whereby the first factor reflected the definition type: old vs new definition of the concept “cash”; while the second reflected three financial reporting groups: preparers, auditors and users. The semantic differential technique developed by Osgood, Suci and Tannenbaum was used to measure connotative meaning.

Findings

The study finds that the three financial reporting groups do not share the same meaning of the concept “cash” and that the introduction of the new definition has changed the interpreted connotative meaning for these three groups. A link between measured meaning and the decisions made by the participants was also established.

Research limitations/implications

The explanatory power of the typical three (evaluative, potency and activity) factor structure should be acknowledged; these factors typically explain 50 per cent of the total phenomena known as “meaning”. The study's findings make an important contribution to the earnings management and creative accounting literature.

Practical implications

The findings are particularly relevant to standard‐setters and regulators as a lack of shared meaning may lead to unnecessary misunderstandings and tensions among the many parties to the reporting process.

Originality/value

The study extends prior measurement of meaning studies in accounting through first, the inclusion of all three major groups of parties to the accounting communication process; second, examination of an accounting concept which is defined differently by two accounting standards in the same jurisdiction; and last, investigation of the impact on decision behaviour (outcomes) resulting from changes in meaning brought about through the introduction of a new standard across the three groups.

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Article
Publication date: 1 January 1996

A. Chew Ng and Keith A. Houghton

Previous researchers (eg. Libby, 1976 and Salamon et al., 1976) have proposed three alternative strategies for improving decisions: (1) changing the information set; (2) replacing…

152

Abstract

Previous researchers (eg. Libby, 1976 and Salamon et al., 1976) have proposed three alternative strategies for improving decisions: (1) changing the information set; (2) replacing the decision maker with a model; and (3) training the user (e.g. with the use of feedback information). The present research focusses on the role of feedback in the prediction of corporate failure. The effect of various types of feedback on human judgments is examined in the present study in two ways. The first section of the paper extends Kessler and Ashton's (1981) study which looked at the impact of several alternative types of feedback. Using 173 advanced undergraduate students as subjects, we find that, contrary to general expectations, both task properties and lens model feedback are not effective for decisions taken within a financial accounting context. Several possible explanations are given for this result. The second section of the paper examines the effect of outcome feedback within a financial accounting context. The participants in this study were 40 advanced undergraduate students. We found that outcome feedback is an effective means for promoting learning even where the task is not highly predictable.

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Asian Review of Accounting, vol. 4 no. 1
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 1 January 2012

Graeme Wines

The purpose of the paper is to examine the extent to which there is shared meaning of the concept of auditor independence between the three major groups of parties on the demand…

8636

Abstract

Purpose

The purpose of the paper is to examine the extent to which there is shared meaning of the concept of auditor independence between the three major groups of parties on the demand and supply sides of the audit services market – auditors, financial report preparers and financial report users.

Design/methodology/approach

The paper utilises the measurement of meaning framework (semantic differential analysis) originally proposed by Osgood et al. in 1957. The framework is used to investigate the extent to which there is shared meaning (agreement in interpretations) of the independence concept, in response to alternative audit engagement case contexts, between key parties to the financial reporting communication process. The study's research data was collected in the period March 2004‐May 2005.

Findings

Findings indicate a robust and stable single‐factor cognitive structure within which the research participants interpret the connotative meaning of the auditor independence concept. An analysis of the experimental cases finds similarities in connotations (interpretations) of an audit firm's independence for the participant groups for most cases, with the exception of cases involving the joint provision of audit and non‐audit (taxation) services.

Research limitations/implications

The usual external validity threat that applies to experimental research generally applies to the study. That is, the results may not be generalisable to settings beyond those examined in the study. An important implication of the study is that it emphasises the continuing problematic nature of the joint provision of audit and non‐audit services, even in situations where the non‐audit services comprise only traditional taxation services.

Originality/value

The study is the first to examine the concept of auditor independence by means of the Osgood et al. measurement of meaning research framework using, as research participants, the three major groups on the demand and supply sides of the audit services market.

Details

Managerial Auditing Journal, vol. 27 no. 1
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 February 2003

Jim Psaros, Chris Patel and Sriyani Warnakulasuriya

This study is an empirical examination of Australian auditors' interpretation of selected key uncertainty expressions such as virtual certainty, expected, reasonable assurance and…

431

Abstract

This study is an empirical examination of Australian auditors' interpretation of selected key uncertainty expressions such as virtual certainty, expected, reasonable assurance and possible, contained in Australian accounting and auditing standards. The results showed three major findings. First, auditors demonstrated a reasonably high degree of variability in the interpretation of uncertainty expressions. In view of the proliferation of uncertainty expressions within international and Australian accounting and auditing standards, this lack of consistency in interpretation of uncertainty expressions raises some serious concerns. Second, compared with the less experienced auditors, the more experienced auditors demonstrated greater variability in their interpretations of uncertainty expressions. Third, contrary to expectations, this study did not find any difference in judgements between auditors in big‐five and non‐big‐five firms. In aggregate, the findings of the study have implications for standard setting.

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Pacific Accounting Review, vol. 15 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 1 December 2007

Hilwani Hariri, Norshimah Abdul Rahman and Ayoib Che Ahmad

The merger of PriceWaterhouse and Coopers & Lybrand marked another historical event in the accounting and auditing industry. Both firms were optimistic that the merger would…

630

Abstract

The merger of PriceWaterhouse and Coopers & Lybrand marked another historical event in the accounting and auditing industry. Both firms were optimistic that the merger would enhance the performance as well as the profession of the merged firms. This research studies the impact of the merger and the price of audit service charged to their clients. The findings showed that there is no significant impact of the merger on audit pricing. The results provide richer understanding of the relationship between organizational structure and pricing in a developing country.

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Journal of Financial Reporting and Accounting, vol. 5 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 26 August 2022

Mazen Malaeb, Grace K. Dagher and Leila Canaan Messarra

As the work context is dynamically changing, enhancing employee engagement through personal and organizational means is still capturing the attention of organizations as well as…

1343

Abstract

Purpose

As the work context is dynamically changing, enhancing employee engagement through personal and organizational means is still capturing the attention of organizations as well as human resources researchers and practitioners. Thus, the purpose of this paper is to examine the relationships between self-leadership, employee engagement, and perceived organizational support and to test the moderating effect of perceived organizational support.

Design/methodology/approach

Data were collected through an online self-reporting questionnaire, with a total of 225 employees from Lebanon and 251 employees from the United Arab Emirates (UAE). Moderating analysis was conducted using Process v3.3 on both samples.

Findings

Results have shown that self-leadership and perceived organizational support were positively related to employee engagement in both countries. However, perceived organizational support served to enhance self-leadership and employee engagement in the UAE, but not in Lebanon.

Practical implications

The findings of this study can be used to help organizations as well as human resources and regional managers operating in the Middle East in giving insights about investing in self-leadership strategies and positively influence employee perception of organizational support to strengthen employee engagement.

Originality/value

This study is unique in exploring the moderating role of perceived organizational support on the relationship between self-leadership and engagement, and original in theoretically proposing and empirically examining the interaction between perceived organizational support and self-leadership. The context of the study in which the proposed relationships were tested for the first time in Lebanon and the UAE, is also novel as both countries are distinguished from other Middle Eastern countries.

Details

Personnel Review, vol. 52 no. 9
Type: Research Article
ISSN: 0048-3486

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Article
Publication date: 1 March 2006

Sumithira Thavapalan, Robyn Moroney and Roger Simnett

This paper investigates the impact of the PricewaterhouseCoopers (PwC) merger in Australia on existing and potential clients of the new merged firm. From prior theory it is…

568

Abstract

This paper investigates the impact of the PricewaterhouseCoopers (PwC) merger in Australia on existing and potential clients of the new merged firm. From prior theory it is expected that some existing clients may have an incentive to switch away from a newly merged firm as the same larger firm now audits close competitors once audited by separate firms. Prior theory also suggests that another group of potential clients should be attracted to the newly merged firm where the merger enhances or creates industry specializations. The expectation is that in both of these instances there will be increased switching activity associated with the newly merged audit firm. Contrary to expectations, a significantly lower level of switching behaviour was observed for the newly merged firm compared with that of the other Big 5 firms, suggesting that an advantage of enhanced specialization may not be the attraction of new clients but the retention of existing clients. When comparing the nature of the switches, some support was found for the view that the switches to the new firm were likely to be in enhanced areas of specialization, but no evidence was found to suggest that close competitors would switch away from this firm. The greater rate of retention of clients compared with other Big 5 firms was not associated with a more competitive audit pricing policy.

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Pacific Accounting Review, vol. 18 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

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Article
Publication date: 1 April 1996

C.A. Jubb, K.A. Houghton and S. Butterworth

Addresses concerns regarding perceptions and measurement of risk and the resultant confusion relating to understanding of the market for audit services. Examines the theoretical…

3547

Abstract

Addresses concerns regarding perceptions and measurement of risk and the resultant confusion relating to understanding of the market for audit services. Examines the theoretical justification for a plural approach to dealing with “risk” in audit fee models. Reviews the relevant literature and undertakes a factor analysis of 229 Western Australian firms in search of evidence of plurality. Argues for recognition of the idea that risk in the audit context is composed of two separate but related concepts: audit risk and business risk.

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Managerial Auditing Journal, vol. 11 no. 3
Type: Research Article
ISSN: 0268-6902

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Book part
Publication date: 23 December 2011

Parmod Chand and Chris Patel

The monographs and reviews on audit judgment and decision-making research published over the years have strengthened this strand of research in auditing by providing insights and…

Abstract

The monographs and reviews on audit judgment and decision-making research published over the years have strengthened this strand of research in auditing by providing insights and suggesting avenues for future research. However, no such comprehensive reviews have been published so far for the research undertaken in the domain of accounting judgment. This chapter reviews the accounting judgment and decision-making research published during 1972–2010 in the five top-tier accounting journals. It evaluates the characteristics and significance of these studies, their theoretical and methodological strengths and weaknesses, and suggests avenues for future research. The insights into accounting judgment and decision-making research provided in this chapter may be useful for improving the research method, theory development, and hypotheses' formulation stages of future studies. The analysis presented in this chapter may also provide the necessary impetus to strengthen this strand of research in accounting in the future.

Details

Achieving Global Convergence of Financial Reporting Standards: Implications from the South Pacific Region
Type: Book
ISBN: 978-1-78052-443-6

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