Search Results (40)

This study investigates the relationship between corporate reporting practices and the value relevance of accounting information by analyzing 100 publicly listed non-financial European firms between 2015 and 2019. Drawing on the Ohlson valuation framework, the analysis combines random effects with Driscoll–Kraay standard errors and System GMM estimations to assess the role of financial and non-financial disclosures. Materiality and stakeholder engagement were scored through content analysis of corporate reports, while ESG performance data were obtained from Refinitiv Eikon. The results show that financial fundamentals remain the most robust determinants of firm value, consistent with Ohlson’s model. Among qualitative disclosures, materiality demonstrates a strong and statistically significant positive association with market value in the random effects specification, while stakeholder engagement and ESG scores do not attain statistical significance. In the dynamic panel model, lagged market value is highly significant, confirming the persistence of valuation, while the effect of materiality and stakeholder engagement diminishes. Interaction models further indicate that materiality strengthens the relevance of earnings but reduces the role of book value, underscoring its selective contribution. Overall, the findings provide partial support for the claim that Integrated Reporting enhances the value relevance of accounting information. It suggests that the usefulness of IR depends less on adoption per se and more on the quality and substance of disclosures, particularly the integration of financial material ESG issues into corporate reporting. This highlights IR’s potential to improve transparency, accountability, and investor decision making, thereby contributing to more effective capital market outcomes. Full article

This study examines whether audit quality enhances the value relevance of earnings and book value of equity in explaining market prices of common shares in Thailand’s emerging market. Using data from 401 non-financial firms listed on the Stock Exchange of Thailand between 2021 and 2023, we analyze 1203 firm-year observations collected from Bloomberg and company annual reports. Multiple regression results show that earnings per share (EPS), book value per share (BVPS), and audit quality measures are significantly associated with share prices. Audit quality is proxied by audit firm size, audit fees, and financial statement irregularities (Beneish M-score). Big 4 auditors increase the relevance of book value, while higher audit fees strengthen the earnings–price relationship. Conversely, firms with higher M-scores, signaling potential earnings manipulation, display weakened associations between accounting metrics and share value. These findings highlight audit quality’s role in reducing information asymmetry, reinforcing investor trust, and supporting market efficiency in a post-crisis environment. By integrating audit quality into the Ohlson valuation framework, this study contributes to the literature on audit assurance and capital market behavior in emerging economies, offering insights for investors, regulators, and managers regarding the credibility of financial reporting. Full article

In this study, we utilize a unique quarterly dataset of non-GAAP earnings to re-examine the “informational” role of non-GAAP earnings from the perspective of value relevance and earnings predictability in the post-Reg G period. We find that non-GAAP earnings are more value relevant and can better predict future operating earnings of a firm compared to equivalent GAAP earnings. Additionally, we also find empirical evidence suggesting that the difference in the value relevance and earnings predictability between non-GAAP and equivalent GAAP earnings can vary across but cannot be completely mitigated by firm-level characteristics, such as the market value of equity, accruals quality, analyst coverage, and managerial ability of a firm. Moreover, our supplementary analysis reveals that the superior value relevance and predictive power of non-GAAP earnings persist even after the SEC’s release of the Compliance and Disclosure Interpretations (C&DI) in 2010. Overall, our empirical evidence suggests a superior “informational” role of non-GAAP earnings to equivalent GAAP earnings in terms of valuation and predictability on future operating performance in the post-Reg G period. Full article

Temporary book-tax differences (BTDs) serve as critical proxies for understanding corporate earnings management and tax planning. However, the drivers of large negative BTDs (LNBTDs)—where book income falls below taxable income—remain underexplored. This study investigates the determinants and components of LNBTDs, focusing on their relationship with deferred tax assets (DTAs) and liabilities (DTLs). Utilizing hand-collected data from the tax disclosures of S&P 500 firms’ 10-K filings (2007–2023), I analyze 4685 firm-year observations to identify specific accounting items driving LNBTDs. Findings reveal that deferred revenue, goodwill impairments, R&D, CapEx, environmental obligations, pensions, contingency liabilities, leases, and receivables are significant contributors, often generating substantial DTAs due to timing mismatches between book and tax recognition. Notably, high-tech industries, like the pharmaceutical, medical, and computers and software industries, exhibit pronounced LNBTDs, driven by upfront revenue recognition for tax purposes and deferred recognition for financial reporting, capitalization, amortization and depreciation effects, and other deferred tax components. Regression analyses confirm strong associations between these components and LNBTDs, with asymmetry in reversal patterns suggesting that initial differences do not always offset symmetrically over time. While prior research emphasizes large positive BTDs and tax avoidance, this study highlights economic and industry-specific characteristics as key LNBTD drivers, with limited evidence of earnings manipulation via deferred taxes. These insights enhance the value relevance of deferred tax disclosures and offer implications for reporting standards, tax policy, and research into BTD dynamics. Full article

An important aspect of sustaining higher education is to produce graduates prepared for careers with the expertise and experiences desired by prospective employers. Micro-credentials delivered by higher education can confirm the students’ mastery of demanded skills and knowledge. The use of micro-credentials as an e-learning technology supports sustainability in higher education by reinforcing students’ employability. With hundreds of thousands of these credentials available in the United States, it is predictable that not all are equal. We explored the perceived value of micro-credentials reported by students and employers. Clear differences were found, with employers recognizing their value more than students. Additionally, we considered the source of the credential, which is the organization that creates, brands, and sponsors the award. Results demonstrated that employers used the sources for assessing value. We also tested the differences when higher education was the provider of the micro-credential, and institution type (issuer) was relevant to employers’ value. Finally, this study distinguished between the academic rigor and integrity of university-delivered micro-credentials associated with earning transcripted course credits and credentials that could be earned without course credits (non-transcripted). Employers valued transcripted micro-credentials more. This study found support for the use of micro-credentials to represent the mastery of skills and knowledge in higher education. Full article

The main objective of the paper is to assess the relationship between firms’ financial resilience and firms’ strategic sustainable development vulnerabilities, in the context of implications of the COVID-19 pandemic on firms’ business environment. Background: The last decade has emphasized an increase in business models’ uncertainty and risk exposure. The COVID-19 pandemic has highlighted the awareness in this direction, especially in a changing context, that looks more and more for corporate sector operations’ orientation towards sustainable development. The question we would address in this paper is how the nexus between corporate sustainability performance and corporate financial resilience is affected by management decision through process improvements, product quality assurance, or managers’ preference to improve corporate financials by earnings management practice instead, especially in the context of specific corporate financial risk management. Methods: The data are extracted from the Refinitiv database. The sample is limited to 275 European Union listed firms, selected based on data availability. The empirical analysis consists of an OLS multiple regression. For robustness purposes, a quantile regression model is estimated as well. Results: The approach considers implications of the pandemic on firms’ business environment and earnings management accounting based policies and strategies as well. The result suggests that alignment to sustainability frameworks lead to the deterioration of firms’ financial resilience. Similar results show the negative impact of firms’ financial vulnerability (credit default risk) on firms’ financial resilience. Instead, the risk of bankruptcy, firms’ liquidity, or high product quality and business process improvement determine the positive impact on firms’ financial resilience. Conclusions: The study highlights several insights both for management and policy makers. First, the results underline the relevance of management’s choice for earnings management on ensuring firms’ financial resilience, which ask for better corporate governance and high-quality and effective institutional regulatory and enforcement mechanisms. Second, the paper brings evidence on the impact of the COVID-19 pandemic on firms’ financial sustainable development. Third, the study emphasizes the importance of the efforts of corporate process improvements and high-quality products on generating value-add, by looking on the relevance of those drivers on the level of corporate economic value-add, a measure that limits the impact of discretionary management accrual-based accounting choices on our discussion. Full article

With the popularity of Play-to-Earn (P2E) games, in-game token economies have become the foundation of the financial structure of virtual worlds. More and more players are investing in digital assets, promoting long-term economic growth. This paper delves into the key factors for the sustainability of the P2E game token economy: the investment value of tokens and external incentives. When tokens are no longer profitable, user churn rates rise sharply, which is critical to the continued development of P2E games. External factors also significantly impact token prices, which affects the stability and sustainability of the entire economic system. In response to these challenges, this paper proposes a series of strategies to enhance token stability, including adjustments to game design, improvements to player incentive mechanisms, and the formulation of relevant policies and regulations. The conclusions of this study aim to provide valuable insights and guidance to game designers, investors, and players to promote the healthy development of Web3 game token economic systems. Full article

Although financial statements are extremely important to investors in decision-making processes, their reliability can be affected by earnings management (EM) practices, which involve manipulating financial reports in order to achieve managerial benefits. This study explores the relationship between earnings management and firm valuation, based on accounting information’s predictive value, specifically investigating how EM influences the value relevance (VR) of earnings on share price. The research focuses on a sample of audited companies listed on the Bucharest Stock Exchange (BSE) between 2019 and 2021, comprising 62 entities. Using regression analysis, we explored the importance of accounting information for investors following Ohlson’s research and examined the relationship between EM and VR based on Jones’s model. The findings indicate that earnings significantly impact stock prices, highlighting their value relevance in the Romanian stock market. However, the practice of earnings management reduces the value relevance of earnings because it decreases the reliability of the accounting information. The main contribution of this analysis is to provide a fresh perspective on earnings management (EM) within the BVB framework by highlighting its pivotal role in shaping the motivation and behavior of corporate managers. Full article

The purpose of this study was to examine the determinants of cash distribution options by critically considering the effects of earnings, dividends, firm size, and economic value added. The distribution of cash dividends to shareholders serves as a basic means by which shareholders receive returns on their investments, so it is essential to examine share repurchases alongside dividends to enhance management’s efforts in maximising shareholder value. This study utilised panel data from 52 companies listed on the Johannesburg Security Exchange (JSE) that engaged in open market share repurchases for at least 2 years between 2000 and 2019. The data were extracted from the IRESS database. The panel data regression model was fitted with the ordinary least squares (OLS), difference generalised moment method (Diff-GMM), system generalised moment method (Sys-GMM), and least-squares dummy variable correction estimator (LSDVC). The findings revealed that there was a positive and significant relationship between the earnings per share and the payoff flexibility, implying that there was an inherent flexibility of repurchases as a payout option in the sampled firms. Additionally, the study revealed a significant negative relationship between the firm size, economic value added, and payoff flexibility. This suggests that larger companies tend to distribute a lower proportion of their earnings as share repurchases and opt for higher cash dividends instead. The implications of these findings provide financial managers with valuable insights into the role of share repurchases as a cash distribution choice. By recognising share repurchases as a viable option, financial managers can enhance their efforts to create and maximise shareholder value, particularly in emerging market settings. This evidence should encourage financial managers to recognise share repurchases more as a distribution choice, diffusing the tension regarding share repurchases replacing the payment of cash dividends and some doubt that they may not possess attributes complimentary to cash dividends. The study recommended relevant academic, industry, and policy implications in the South African context. Full article

The pressing necessity to address climate change calls for the reduction in carbon emissions in the energy sector. Renewable energy communities (RECs) provide environmental, financial, and societal advantages that facilitate the shift towards sustainable energy sources. This paper examines the development of RECs in Italy through a case study in the Municipality of Assisi, and investigates the pivotal role played by public administrations as catalysts in the formation of RECs. Despite facing unique challenges and constraints, Assisi leverages RECs and the proactive approach of the local government to overcome barriers hindering the implementation of renewable energy projects. A municipality-led REC of a total power of 2 MWp by 2030, using clusters of prosumers and consumers and including energy-intensive municipal facilities, is investigated. Through rigorous simulations and the resulting shared energy, the study conducts a comprehensive analysis encompassing technical, energy, and economic aspects. The results, including relevant energy indices, are presented and various scenarios are discussed as the energy shared varies. Finally, sensitivity analyses show that the profitability strongly depends on the cost of energy, the remuneration from the sale, and the value of the incentive earned on the shared energy: the simple payback time ranges from 8 to 14 years and NPV varies from EUR 0.8 to 4.5 M. Full article

The main issues of accounting reporting regarding goodwill are whether a firm’s management reliably conveys their private information about future earnings, and whether they disclose value-relevant and useful information to accounting users. In the current International Financial Reporting Standards (IFRS) regulations, the goodwill impairment test is based on management’s discretionary assessments. This study examines how goodwill impairment is reported under IFRS considering company- and industry-specific economic factors, proxies for earnings management, and macroeconomic crisis years. We extend previous research using tobit and logit regressions by employing a fixed-effects model. This approach is possible because of a panel dataset comprising 449 of 600 active companies sampled from the STOXX Europe 600 index from 2005 to 2018. We find that goodwill impairments are largely concentrated in certain companies, industries, and years. The regression models show a significant negative correlation between companies’ return on total assets and goodwill impairments. Moreover, we discover that goodwill impairments have a significant positive correlation with goodwill intensity, debt ratio, and the proxy for reporting a one-off big bath charge. In addition, we find that the global financial crisis in 2008–2009 and the European debt crisis in 2011 differ significantly from other fiscal years. Full article

Equity investors value CEO social capital when pricing firm equity. When CEO social capital is high, the value relevance of the book value of equity declines, whereas the value relevance of earnings measures increases. Results are stronger for firms in high-tech industries where information asymmetries are higher. Social capital may be deconstructed into informational and reputational effects and we report that social capital is a meaningful determinant of value relevance in both scenarios. Results are robust to alternative variable definitions, controls and tests for endogeneity. The results strongly suggest that CEO social capital improves the information environment around firms, benefiting users of accounting metrics. Full article

This work utilizes the Taiwanese data primarily focused on retailing investor behavior to examine whether Taiwanese brokerage analysts issue target price revisions, whether implicit information connotation exists and whether their own brokerages use the market reaction brought about by target price revisions to conduct conflict of interest operations. The event study is used to verify whether the above results exist. The empirical results show that analysts may publish information that includes investment recommendations, earnings forecasts, or price target forecasts. Whether investors with immediate and post-event media coverage revise their relevant investment strategies and avoid serious losses caused by this news is established. The research results show that the target price revision has implicit information content no matter the target price being revised. In addition, a conflict of interest between dealers’ trading behavior and analysts’ target price revisions exists. The major contribution of this work is to fill the research gaps concerning which retail investors are easily influenced by social media and herding behavior, as well as target price forecasting. The most efficient use of resources relates to the satisfaction of everyone’s interests on a fair basis, and thus greater contribution. The governance mechanism and check and balance function can help maximize the value of the company, not only by enhancing the competitiveness of the enterprise, but also by increasing the value of shareholders’ rights and interests and better fulfilling corporate social responsibility. Full article

This study examines whether relevant accounting ratios influence the stock prices of high-technology service enterprises in five countries, namely, the United States, Japan, China, the United Kingdom, and France. Subsequently, this study determines the existence of pricing error (if any) between the intrinsic value and the market value of the stock price due to the accounting ratios. Content analysis was performed on the annual reports of 326 high-technology service enterprises to determine the effect of three accounting ratios, namely diluted earnings per share, revenue per share, and book value per share, on the stock price of the high-technology service enterprises. This study shows that diluted earnings per share and book value per share influence the stock price of high-technology service enterprises. However, this study shows revenue per share does not influence the stock price of high-technology service enterprises. In addition, this study shows that, on average, the pricing error of high-technology services enterprises is considered moderate, with some countries exhibiting higher pricing errors. This study provides insight into how much accounting ratios can influence the movement of stock prices and, in turn, assist investors in understanding the key metrics within the high-technology industry. Full article

This study investigates whether the inclusion of the fair-value-based hedging performance measure improves the value and risk relevance of accounting earnings using data from the regulatory filings of bank holding companies required by the Federal Reserve Bank. Statement of Financial Accounting Standards No. 133 (SFAS 133) requires most types of hedge ineffectiveness to be measured on a fair value basis and reported in earnings. This earnings recognition requirement was the focal point of controversy surrounding the adoption of SFAS 133. This study provides new evidence that the fair-value-based earnings component required under SFAS has predictive power over future performance. I further show that incorporating this fair-value-based hedging performance measure helps improve the value and risk relevance of accounting earnings. The findings of this study help inform the broader debate over the effect of fair-value-based financial reporting on capital markets. Full article