Saoussen Boujelben and Sameh Kobbi-Fakhfakh
The purpose of this study is to explore the degree of compliance of a sample of European Union (EU) listed groups with the International Financial Reporting Standard 15 (IFRS 15…
Abstract
Purpose
The purpose of this study is to explore the degree of compliance of a sample of European Union (EU) listed groups with the International Financial Reporting Standard 15 (IFRS 15) mandatory disclosures in two specific sectors, namely, telecommunication and construction.
Design/methodology/approach
To carry out this research, the authors selected 22 annual reports for the year 2018. The authors created and completed a datasheet based on a close review of the IFRS 15 disclosure requirements. A content analysis of the selected annual reports was then performed.
Findings
The results show that the sampled groups do not fully comply with the IFRS 15 mandatory disclosures and the degree of compliance differs between the two investigated sectors.
Originality/value
To the best of the authors’ knowledge, this study explores, for the first-time, the degree of compliance with the IFRS 15 mandatory disclosures, by focusing on a cross-country sample of EU listed groups.
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Sameh Kobbi-Fakhfakh and Fatma Bougacha
This study aims to examine the impact of the COVID-19 pandemic on corporate tax avoidance (TA).
Abstract
Purpose
This study aims to examine the impact of the COVID-19 pandemic on corporate tax avoidance (TA).
Design/methodology/approach
This study used a panel data set of US publicly traded firms listed in the Standard & Poor 500 index. Based on available information in the DATASTREAM database covering the 2019–2021 period, three proxies for TA are used, namely the current effective tax rate (CUETR), the cash effective tax rate and book-tax differences (BTD). Multiple regression models including industry and year fixed effects are estimated. Additional analyses are performed using BTD components i.e. temporary and permanent BTD, and testing the impact of the COVID-19 pandemic across industries.
Findings
The results show that the outbreak of the novel coronavirus (COVID-19) affected positively the CUETRs and negatively BTD, indicating a reduction in TA, in the postpandemic period. Further analyses provide evidence that this effect is the same, regardless of the degree of industry failure probability, but it is more driven by the reduction of deferred tax expenses (temporary BTD component). These findings suggest that the US publicly listed firms have experienced a serious drop in their income in the postpandemic period, following the markets closure and the quarantine periods that hampered business. Therefore, with lower profits, they are not willing to evade taxes.
Social implications
This paper enriches taxation research during economic crises. The research findings have important policy implications. On the one hand, the fiscal policy should stimulate growth to allow firms to tackle the challenges they confronted post-COVID-19. On the other hand, the global economic crisis caused by the pandemic has led to a major deterioration in public finances and has raised inequalities across households. Therefore, it would be necessary to review public fiscal policies to achieve a balance of equity, growth and sustainability. In this context, tax reform focusing on tax progressivity could counter in part the negative economic effects of the COVID-19 pandemic and led to economy recovery.
Originality/value
This study contributes to the growing body of literature on the COVID-19 effects with a special focus on corporate practices. This study provides first evidence on the effect of the COVID-19 pandemic on manager’s behavior from taxation perspective. This study also enriches taxation research during economic crises.
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Sameh Kobbi-Fakhfakh, Ridha Mohamed Shabou and Benoit Pigé
This study aims to provide some empirical evidence on the determinants of segment reporting quality, and to propose a new measurement tool of segment reporting quality – segment…
Abstract
Purpose
This study aims to provide some empirical evidence on the determinants of segment reporting quality, and to propose a new measurement tool of segment reporting quality – segment reporting quality index (SRQI).
Design/methodology/approach
On the basis of hand-collected segment data for a sample of 171 European Union publicly listed companies from the 2006-2012 annual reports, the study uses multiple regression model to investigate the determinants of segment reporting quality. A new measurement of segment reporting quality is constructed. It aggregates different segment reporting practices indicators, including the number of segments, the extent of information disclosed and the geographic fineness. Additional estimations are conducted to test the robustness of the results.
Findings
The results suggest that there is a substantial variation in the quality of segment reporting among the sampled European Union firms. Large corporations, audited by Big 4 auditors and more internationally oriented, tend to provide a higher quality of segment reporting. In contrast, debt leverage negatively impacts the quality of segment reporting. However, the quality is not significantly related to profitability. The findings are fairly robust to a number of econometric models that control, for year fixed effects and pre- and post-International Financial Reporting Standards 8 adoption. Overall, the findings are generally consistent with the predictions of agency theory.
Research limitations/implications
The results imply that considerable managerial discretion exists. Despite the IFRS commitment to enhance comparability of the financial statements, segment information remains very disparate. It enables investors to get a better understanding of a firm’s activities, but it does not allow for a better assessment of a firm as compared to the other firms of the same sector. As compared with other IFRS standards, the segment reporting has more relation with corporate governance structure and specific institutions that regulate a sector or a country. Furthermore, the results show that firm characteristics are associated with the study’s aggregated measure of segment reporting quality (SRQI) consistently with theoretical and empirical evidence. SRQI can, thus, be used by researchers for replication or to study new questions on firms’ segment disclosure behavior on a much wider set of firms in the economy. While this research makes several noteworthy contributions, the authors acknowledge that SRQI considers only multisegments firms that disaggregate their primary/operating segments by line-of-business and disclose secondary/entity-wide level geographic information.
Originality/value
This study offers new evidence on the determinants of segment reporting quality following IFRS adoption, in the European Union context. This study contributes to the existing literature by proposing an aggregated measure of segment reporting quality (SRQI). Unlike previous measures, which were usually limited to researcher self-constructed indexes, SRQI captures different facets of segment information in terms of disaggregation and disclosure extent.