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This paper aims to investigate whether the managers’ emphasis on audit in the management’s discussion and analysis (MD&A) section of the 10-K filing, as part of the firm’s “tone at the top,” is linked to audit quality.

Adopting a computational linguistics approach, the authors measure the manager’s audit emphasis as the frequency of audit-related words in the MD&A. The authors then assess the relationship between audit emphasis and audit quality with ordinary least squares and probit regression models.

This study finds that the manager’s audit emphasis, proxied by the count of audit-related words, is positively associated with audit fees, audit delay, the appointment and retention of Big 4 and industry-specialist auditors, and the probability of switching to Big 4 auditors, while negatively linked to abnormal accruals and the possibility of financial misstatements.

The audit emphasis measure suffers from limitations. The computer program determining audit emphasis may misinterpret words in the MD&A. Researchers need to consider procedures to minimize misinterpretations.

Frequency of audit words in the MD&A reflects the firm’s aspiration for audit quality. Auditors, regulators and investors could ascertain such aspiration from past and current MD&As.

This study associates the manager’s emphasis on audit, measured with computational linguistics from the MD&A, with realized audit quality.

Extant studies propose music sentiment as a novel measure of individuals’ sentiment. These studies argue that individuals’ choice of music reflects their emotional condition in real time and influences their cognitive ability, making it a powerful tool for assessing their mood. This study aims to use music sentiment as a proxy for auditors’ mood and explore its impact on audit quality.

A sample of the US firms from 2017 to 2020 is used in the study. The authors apply the ordinary least squares regressions and the logit regressions to the audit quality models. The authors use absolute discretionary accruals and the propensity to meet or beat earnings forecasts as proxies for audit quality and calculate a stream-weighted average sentiment measure for Spotify’s Top-200 songs of each day during the audit period of a client firm to capture the sentiment of auditors.

The authors find that music sentiment is positively associated with audit quality. The result is consistent with the mood maintenance hypothesis, which suggests that a positive mood can induce auditors to be more careful in risky situations. Furthermore, the result is robust to various sensitivity analyses.

The study contributes to the scarce literature that focuses on auditors’ emotional state and highlights the importance of monitoring auditor mindset during the audit period.

The purpose of this study is to investigate the impact of the age diversity of the top management team (TMT) on firm performance and on the managerial ability of the TMT. Furthermore, this study investigates how the relationship between age diversity and firm performance is mediated by managerial ability and the contextual nature of the relationship.

This is an empirical study which uses regression analyses and mediation analyses to evaluate the hypotheses.

The authors observe a negative relationship between age diversity and firm performance and also between age diversity and managerial ability of the TMT. Further, the authors find that that the negative relationship between age diversity and firm performance is mediated by managerial ability. The authors also find that the relation between performance and age diversity is context specific – the negative relationship between age diversity and firm performance is ameliorated during times of financial crisis.

In an environment where diversity is beginning to be valued, insights into the impact of different types of diversity on performance become important. Age diversity is a critical component of diversity. Therefore, insights into the impact of age diversity on performance will be of interest to managers, academics and even regulators.

To the best of the authors’ knowledge, this study is the first to evaluate the impact of age diversity on the market perception of firm performance of US firms using a large, comprehensive, multi-year data set. Furthermore, this is the only study to evaluate the impact of age diversity on managerial ability and show the mediating effect of managerial ability on the relationship between age diversity and firm performance.

This paper aims to investigate whether audit fees and financial report readability are bi-directionally related.

The authors test their hypotheses with empirical data. Specifically, they adopt a two-stage simultaneous equation regression model to assess the bi-directional relationship between audit fees and financial report readability.

While poor readability increases the fees charged by the auditor, higher audit fees improve the readability of the financial reports.

This study is based on US data. Future research may extend this study to other countries.

Poor financial report readability encumbers stakeholders of the firms. Understanding the interaction between financial report readability and audit fees will help both auditors and firm managers.

Audit committees aggressively negotiating for lower audit fees should be aware of the link of low audit fees, potentially indicative of poor quality, to less readable reports. Investors and regulators too should be concerned about this relationship, especially in instances when auditors low-ball audit fees or when firms aggressively negotiate for lower audit fees.

To the best of authors’ knowledge, this study is the first to document the bi-directional relationship between financial report readability and audit fees and assess the positive impact of audit fees on financial report readability.

The authors investigate whether the different tenure phases of executives have a differential effect on audit pricing. Two alternate views – career concern and power – can explain the effect of executives’ tenure on audit pricing. This paper aims to determine, which viewpoint dominates in explaining the relationship between audit pricing and executive tenure phases.

Using a sample of 11,198 firm-year observations from 2007 to 2016, the authors adopt an ordinary least squares regression model to assess the impact of the middle and long phases of executives’ tenure on audit fees.

Audit fees are significantly lower when executives enter the middle and long phases of tenure. The reduction in audit fees is greatest as both chief executive officers and chief financial officers enter the long tenure phase. Although audit fees gradually decrease as executive tenure is extended, they start increasing two years before the end of executive tenure. Furthermore, the negative association between the executive tenure phase and audit fees is greater when the executive is appointed externally. Finally, the long phase of executive tenure also mitigates the positive relationship between audit fees and internal control weaknesses.

This study is based on US data. Future research may extend this study to other countries.

The findings are important to firms, practitioners and academicians, particularly, as the length of tenure of top executives has increased in recent years. By documenting that executives’ middle and long tenure phases reduce audit fees, the findings highlight the importance of maintaining executives in the firm. Finally, the findings have implications for investors, policymakers and auditors to identify companies with high audit risk.

This study is the first to document the impact of executives’ middle and long tenure phases on audit fees.

While Merger & Acquisition (M&A) activity has reached unprecedented levels over recent years, M&A failure rates remain high. Yet, there is growing evidence that private equity funds show high success rates. As little is known about the differences between different types of buyers, and only scant information exists on private equity funds’ operations, we inductively explore the reasons for their outperformance. In this qualitative study, we identify three characteristics (i.e., organizational set-up, private equity investors’ professional identities, and an integrative work approach), which we brought together into a theoretical framework that explains how private equity professionals can enable better M&A performance. Finally, our findings underline the effectiveness of specific incentivization approaches applied in private equity funds.

The flammability of poly-acrylate (PA) resin is a major disadvantage in applications that require flame resistance. Many studies, including the authors’ previous study, have proved that covalent-incorporated phosphorous-containing (P-containing) monomer onto the PA resin can exhibit better flame resistance than that by an additive approach. However, other properties such as thermal stability, coating properties are still deteriorated. To further improve the flame-retardancy and other comprehensive properties of the P-containing PA resin, in this study, melamine formaldehyde(MF) resin was used not only as a curing agent to enhance the coating properties of the PA resin, but also as a nitrogen-containing (N-containing) resin to form a P-N synergistic effect and therefore further improve its flame retardancy.

Epoxy resin phosphorous acid-modified (EPPA-modified) PA (EPPA-PA) resin was first prepared and then using MF resin as curing agent. The flame retardancy of the cured resin was tested by the limiting oxygen index (LOI) and UL 94 methods. The thermal stability of the cured resin was studied by TGA. The coating technology such as adhesion property, pencil hardness and anti-solvent properties were characterized according to methods of International Standards ISO2409-1992, ISO 15184-1998 and ISO-15184-2012, respectively. The micro-char morphology of the char residue was observed by SEM.

The results showed that by using MF resin as curing agent has provided the PA resin with excellent coating properties and thermal stability, but also gave a P-N synergistic effect which has greatly enhanced the flame retardancy of the cured resin. The cured resin system containing only 1.7 Wt.% P content and 5.3 Wt.% N content can reach a LOI of 26.9 per cent and pass the V-0 rating in the UL-94 test.

This resin system releases formaldehyde due to the MF resin.

It is expected that the large-scale production of this EPPA-PA resin cured by MF resin system will enable practical industrial applications.

This method for the synthesis of a P- and N-containing PA resin system is newfangled.

The Zr-40Ti-4.5Al-4.2V (ZT40) alloy is one of new developed Zirconium alloys with high mechanical properties and great potential for application. The investigation about effects of plastic deformation on microstructure and mechanical properties can promote practical applications of the new high performance ZrTi based alloys. The microstructural evolution and mechanical properties of the ZT40 alloy suffered hot rolling with thickness reduction from 30% to 60% at 775 °C are investigated in this work. Results show that the phase constitution changes from (α + β) to (β + fcc) while the original specimen underwent hot rolling and subsequent water quenching. The β phase in hot rolled specimen adopts preferred orientation form (200) and (211) planes to only (200) plane while the rolling reduction increases from 30% to 60%. Furthermore, no obvious preferred orientation can be detected in specimen with reductions of 60%. Micrographs analysis shows that the dynamic recrystallization occurs in hot rolled specimens. Volume fraction of the DRX grains is approximately 8% in 30% reduction specimen and increases with the increasing of rolling reduction. Nearly full recrystallization is observed in the specimen with reductions of 60%. Hardness test shows that the HV of hot rolled specimen decreases from 384 HV to 329 HV as the increasing of reduction from 30% to 60%. The mechanisms of microstructural evolution and variation of hardness are also discussed. The finding should contribute to understand microstructural evolution, to adjust mechanical properties and to promote practical applications of Zirconium alloys.

The purpose of this paper is to investigate the way in which CEOs are shielded or rewarded for incurring R&D expenses. Strategic expenses such as R&D yield returns over a long period of time even though GAAP requires them to be written off in the period they are incurred. Going beyond the existing shielding paradigm, the paper investigates whether compensation committees actively reward CEOs for incurring strategic expenses.

The paper uses empirical analysis by using regression analysis with CEO compensation (both cash and equity) as the dependent variable and firm size, firm performance, earnings risk, market‐to‐book ratio, R&D expenses, advertising expenses and governance variables as control, independent and test variables.

The paper shows that CEOs are not only shielded but are actively rewarded for incurring R&D expenses. The paper also shows that the shield/reward effects are stronger in manufacturing firms. Finally, the paper shows that independent compensation committees increase rewards for R&D expenses.

Given the small sample of firms with advertising expense data, a larger sample, possibly using hand‐collected data will be required to arrive at definitive conclusions regarding shielding/rewarding for advertising. Furthermore, the shielding of both R&D and advertising expenses should be looked at in conjunction with the duration of the persistence of benefits of such strategic expenses.

This paper shows how compensation committees can use compensation to induce executives to undertake strategic expenses on behalf of the firm.

In smart cities striving for innovation, development, and prosperity, hydrogen offers a promising path for decarbonization. However, its effective integration into the evolving energy landscape requires understanding regional intricacies and identifying areas for improvement. This chapter examines hydrogen transport from production to utilization, evaluating technologies’ pros, cons, and process equations and using Analytic Hierarchy Process (AHP) as a Multi-Criteria Decision-Making (MCDM) tool to assess these technologies based on multiple criteria. It also explores barriers and opportunities in hydrogen transport within the 21st-century energy transition, providing insights for overcoming challenges. Evaluation criteria for hydrogen transport technologies were ranked by relative importance, with energy efficiency topping the list, followed by energy density, infrastructure requirements, cost, range, and flexibility. Safety, technological maturity, scalability, and compatibility with existing infrastructure received lower weights. Hydrogen transport technologies were categorized into three performance levels: low, medium, and high. Hydrogen tube trailers ranked lowest, while chemical hydrides, hydrail, liquid organic hydrogen carriers, hydrogen pipelines, and hydrogen blending exhibited moderate performance. Compressed hydrogen gas, liquid hydrogen, ammonia carriers, and hydrogen fueling stations demonstrated the highest performance. The proposed framework is crucial for next-gen smart cities, cutting emissions, boosting growth, and speeding up development with a strong hydrogen infrastructure. This makes the region a sustainable tech leader, improving air quality and well-being. Aligned with Gulf Region goals, it is key for smart cities. Policymakers, industries, and researchers can use these insights to overcome barriers and seize hydrogen transport tech opportunities.