Rudolph A. Jacob, Samir El-Gazzar and Scott McGregor
This paper aims to examine the capital market effects and predominance of unregulated embedded value (EV) financial reporting in the life insurance industry in foreign domestic…
Abstract
Purpose
This paper aims to examine the capital market effects and predominance of unregulated embedded value (EV) financial reporting in the life insurance industry in foreign domestic markets, and US markets for foreign firms that cross-list in the USA.
Design/methodology/approach
Recent empirical archival data are analyzed and evaluated to determine the incremental and relative value relevance of an unregulated valuation metric that is disclosed by life insurers.
Findings
The findings support the proposition that EV is valuable supplemental information in foreign domestic markets, and in US markets for foreign life insurers that cross-list in the USA. Given that International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) are engaged in projects to improve accounting standard for insurance companies, and have faced criticism with the existing drafts on this issue, the two institutions ought to consider the valuation relevance of EV disclosures. Moreover, this analysis strongly suggests that financial analysts in the USA should consider EV in valuing life insurers’ stocks.
Practical implications
The findings discussed in this paper are of special interest to financial reporting policy makers, financial analysts, firm compensation committees and managers, and academics.
Originality/value
This paper contributes to the extant literature by providing recent evidence that suggests that EV, an unregulated fair value market-driven metric, is more value-relevant than traditional earnings metrics such as earnings and book value. It is the only study that we are cognizant of that critically examines the recent empirical literature on this evolving issue.
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Samir M. El-Gazzar and Philip M. Finn
This paper aims to examine whether sanctioning adoption of IFRS for US firms would produce accounting information of the same quality as those produced under US Generally Accepted…
Abstract
Purpose
This paper aims to examine whether sanctioning adoption of IFRS for US firms would produce accounting information of the same quality as those produced under US Generally Accepted Accounting Principles (GAAP). This is a timely research since the Securities and Exchange Commission (SEC; 2014) has asked for further review.
Design/methodology/approach
This study uses restatements of financial statements made by a sample of foreign firms listed on US stock exchanges using International Financial Reporting Standards (IFRS) in comparison to a control sample of US firms using US GAAP during the period of 2001to 2010. Statistical analysis of the frequency, sources and magnitude of the restatements and market revaluations to the announcement of the restatements are examined. Cross-country differences are also examined.
Findings
The results indicate that IFRS firms have a lower rate of restatements than US GAAP firms but with no significant differences in terms of sources of restatements and the impact on net income or shareholders’ equity. The market revaluations to restatement announcements show no significant differences between the two accounting regimes. Cross-sectional analyses indicate IFRS firms are on average from countries characterized by weak rule of law, ineffective corruption controls and lower efforts to promote private sector advancement.
Research limitations/implications
The sample size in the paper is relatively small. To increase validity of the inferences from the Results, this issue should be readdressed with larger sample.
Practical implications
Results are important to accounting practitioners and policymakers.
Social implications
Results are contributing in clarifying the SEC’s concerns of adopting the IFRS by US-based firms; thus, saving the investors the additional efforts and costs in comparing financial statements prepared under different accounting regimes.
Originality/value
This research is the first to use restatements as accounting quality criteria. The results suggest that adoption of IFRS by US-based firms would not produce accounting information that is significantly different in quality from those generated under US GAAP. This result should be of interest to the SEC in clarifying its concerns.
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Thomas D’Angelo, Samir El-Gazzar and Rudolph A. Jacob
This paper aims to examine the characteristics of firms that voluntary disclose generally accepted accounting principals (GAAP)-compliant statements of income, statement of cash…
Abstract
Purpose
This paper aims to examine the characteristics of firms that voluntary disclose generally accepted accounting principals (GAAP)-compliant statements of income, statement of cash flows (SCF) and balance sheet (BS) concurrently with quarterly earnings releases. Cardinal motivation of the paper stems from the increasing demand over the past decade by professional analysts and the Securities and Exchange Commission for concurrent disclosure of GAAP-compliant financial statements with earnings’ announcements.
Design/methodology/approach
Using hand-collected archival data, a random sample was identified as disclosing GAAP-compliant SCF and BS with their quarterly earnings releases compared to a control sample identified as non-GAAP-compliant disclosing firms during the 36-month period of 2009-2011, and several hypotheses are tested to determine managements’ incentives to disclose GAAP-compliant versus non-GAAP financials with their earnings releases.
Findings
The results in this paper suggest that debt financing, corporate governance, operating performance, earnings volatility, industry membership (such as technology and more research and development-intensive) and complexity of operations (number of segments) are significant characteristics of firms electing to concurrently disclose GAAP-compliant SCF and BS with earnings releases.
Practical implications
The findings discussed in this paper are of special interest to financial reporting policymakers, financial analysts, firm managers and stakeholders and academics.
Originality/value
The voluntary disclosure literature on quarterly earnings releases is extended by differentiating between GAAP-compliant and non-GAAP-compliant voluntary disclosers. The specific findings of this study may provide valuable input to policymakers as they study prevailing voluntary disclosure rules and practices.
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Kam C. Chan, Samir El-Gazzar, Rudolph A. Jacob and Picheng Lee
The purpose of this paper is to investigate the impact of the US Securities and Exchange Commission (SEC) accelerated deadline on foreign firms, and the 20-F filing practices and…
Abstract
Purpose
The purpose of this paper is to investigate the impact of the US Securities and Exchange Commission (SEC) accelerated deadline on foreign firms, and the 20-F filing practices and factors relating to the filing lags.
Design/methodology/approach
The authors identified 338 firms that file 20-F reports with the SEC during the period of 2010 and 2011. The authors then used multivariate regressions to examine the effects of the shortened deadline on foreign firms’ filing practices and the factors associated with these practices. In the regression models, the authors also control for other firm characteristics that have shown to affect the filing lags of US firms such as firm performance, size, mergers and restructures, audit firm, compliance with internal control requirements under Sarbanes Oxley Act, internal control weaknesses, going concern audit opinion and operating complexity.
Findings
Based on a sample of 338 US-listed foreign firms, the results indicate that there is a significant reduction in the filing lags and a change in their distribution for fiscal year 2011, as compared to the preceding year, and as intended by the SEC. The authors also find that 20-F filing lags are negatively related to the use of International Financial Reporting Standards (IFRS) or US-GAAP in 20-F reports and use of the English language in foreign firms’ home countries.
Practical implications
The findings of this paper are of interest to accounting regulatory bodies including the SEC, US Financial Accounting Standards Board and the International Accounting Standards Board by showing that registrants respond positively to regulations intending to promote timeliness of accounting disclosures and reporting, although many firms may oppose them in the due process stage.
Originality/value
The authors contribute to the extant literature by providing new evidence that 20-F filing lags are negatively related to the use of IFRS or US-GAAP in 20-F reports, and the use of English language in foreign firms’ home countries.
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This paper examines the effect of institutional investors on the trading volume reaction to management forecasts of annual earnings. Based on a sample of forecasting firms between…
Abstract
This paper examines the effect of institutional investors on the trading volume reaction to management forecasts of annual earnings. Based on a sample of forecasting firms between 1990 and 1992, institutional investors are examined as heterogeneous types, rather than as a single group as done in prior research. The findings contribute to the growing literature on institutional investor types in two ways: (1) institutional categories differ in their trading patterns, and (2) if the categories are classified into active and inactive types, then greater trading by active institution‐types signals greater investor‐level information asymmetries and greater trading by inactive institution‐types signals lower investor‐level information asymmetries. Overall, the results suggest that increased firm voluntary disclosures, as encouraged by the SEC and the AICPA, may be differentially informative to different types of investors.
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Joseph Akadeagre Agana, Stephen Zamore and Daniel Domeher
This paper aims to examine the theoretical underpinnings of international financial reporting standards (IFRS)-related studies and offers directions for theoretical and empirical…
Abstract
Purpose
This paper aims to examine the theoretical underpinnings of international financial reporting standards (IFRS)-related studies and offers directions for theoretical and empirical research. Specifically, this study examines the main theories in IFRS adoption research (i.e. adoption, compliance and effects).
Design/methodology/approach
The sample contains 67 empirical papers that have used theories and was collected from Web of Science database. This study uses a systematic review technique.
Findings
Generally, the review shows the prevalent and pervasive use of institutional theories of isomorphism across all the three areas of IFRS adoption. Particularly, regarding IFRS adoption stream, this study finds the institutional theory as a dominant theory used to explain IFRS diffusion around the globe. For IFRS compliance, this study finds that the agency and the capital need theories are widely used. For IFRS adoption effects stream, this study finds a few studies using the contingency and neo-institutional theories. Overall, the review provides theoretical lens for IFRS adoption, IFRS compliance and IFRS adoption effects.
Originality/value
Given the lack of a well-defined set of theories in the domain of accounting, the findings provide further guidance on theory building within the field. Further, accounting regulators, academics and practitioners may benefit from the findings when explaining various changes in the world of accounting.
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George Kofi Amoako, Theresa Obuobisa-Darko, Kwasi Dartey-Baah and Genevieve Sedalo
This paper aims to focus on the nexus between sustainability and desired outcomes for smart cities. The main focus is on how green leadership influences the relationship between…
Abstract
Purpose
This paper aims to focus on the nexus between sustainability and desired outcomes for smart cities. The main focus is on how green leadership influences the relationship between smart and sustainable activities and stakeholder management.
Design/methodology/approach
The work is essentially a non-empirical review of the literature to develop a conceptual model to be tested in a subsequent study.
Findings
The findings indicate that smart cities and their sustainability activities can drive desired outcomes through green leadership. Also, green leadership has an indirect relationship with the desired outcomes of smart cities; hence, managers in the tourism and hospitality industries should cultivate their green leadership style to assist smart cities in accomplishing their goals.
Research limitations/implications
This research is conceptual, and the proposed model will need to be evaluated to be more valid. Furthermore, the model is restricted to the tourist and hospitality industry, limiting the generalization and application of the findings to that area. Furthermore, because sustainability activities and smart city leadership differ by region or country, the proposed model will be suitable for more developed economies with more developed sustainability policies.
Practical implications
This paper makes a novel theoretical contribution by using stakeholder management as a mediating variable and green leadership as a moderating variable concurrently.
Originality/value
This model suggests that smart and sustainability activities of cities can lead to desired outcomes for smart cities through effective stakeholder management and green leadership.