Purpose This study investigates the peer effects in corporate data asset allocation and examines how chain shareholders influence these effects and the underlying mechanisms through which such influence operates. Design/methodology/approach Utilizing data from listed companies in China's A-share market (2012–2023), this paper conducts empirical analyses, including moderating effect tests, endogeneity treatments, robustness checks, heterogeneity analyses, mechanism test and economic consequence tests. Findings The findings reveal that there are notable peer effects in corporate data asset allocation. Moderating effect tests indicate that chain shareholders strengthen the peer effects, especially in non-state-owned, non-manufacturing, technologically advanced and growth-stage firms. Mechanism test outcomes demonstrate that chain shareholders accelerate peer effects by elevating the positive role of digital transformation in the peer effects of data asset allocation. Furthermore, economic consequence tests suggest that the peer effects in corporate data asset allocation ultimately elevate market competitive position and propel high-quality corporate development. Originality/value This paper not only diversifies the theoretical research on data assets from a peer perspective but also furnishes practical guidance for firms on how to advance data asset allocation.
Purpose This study aims to examine the direct and indirect relationship between the importance of CEO's Traits and firm value, using climate change risk as a mediating variable in the Chinese context. Design/methodology/approach To test the direct and indirect effects between the importance of CEO's Traits and firm value, this study uses a panel dataset of 699 Chinese firms between 2018 and 2024. Findings The regression results show that climate change risk mediates the relationship between the importance of CEO's Traits and firm value. Furthermore, the risk of climate change plays a partial mediating role in this relationship, presenting a significant negative effect. Practical implications These results have policy and practical implications that could help regulators improve transaction quality and ensure more effective market oversight. They recommend that governments implement regulations and restrictions on firm value based on the importance of CEO's Traits in the Chinese context. Originality/value While existing literature has examined the direct relationship between CEO's Traits and firm value, this work focuses on examining the direct and indirect association between these characteristics and firm value, via the mediating effect of climate change risk, an approach that has been relatively unexplored to date.
This paper examines a decade of research on the correlation between sustainability and family-owned businesses. It explores the critical aspects of sustainability and how they impact family ownership, pinpoints gaps in the existing literature and outlines potential research areas for the future. This article examines the research on sustainability in family firms (FF) over the past decade by analysing 162 relevant articles from Web of Science and Scopus. Through a text-mining approach utilising latent Dirichlet allocation (LDA), latent topics were extracted from the literature and thoroughly analysed. The study identifies eight topics associated with family businesses and their sustainability efforts, offering insights into critical areas of research and the interactions between sustainability and family businesses. The study results are essential for FF and sustainability literature. They suggest eight topics related to sustainability practices, which are transversal to all companies and of interest to their stakeholders. The current paper allows researchers to analyse the topics addressed in depth. Managers can obtain relevant information that may encourage them to invest in sustainability and reduce information asymmetry and regulators can improve current and future guidelines. Promoting FF’s consistent adoption of sustainable practices is imperative. Given their pivotal role in the business market, it is crucial to effectively communicate this commitment to the general public, regulators and investors. Underscoring the critical role of sustainability in attaining long-term success becomes essential for these firms. The article stands out for its innovative approach. It focuses on family businesses and uses text-mining methods to analyse the literature on sustainability, thus filling a gap in existing research.
Purpose Corporate sustainability development has become a concern for various parties around the world, including investors. In our study, we investigate the relationship between investor attention and sustainable performance in emerging economies.Design/methodology/approach Our study focuses on banking listing companies in ASEAN countries for the period 2015-2024 and applies ordinary least squares regression to test the models.Findings Our study shows that investor attention is positively associated with sustainability performance. In the view of the limited attention theory, investors focus on firms with better ESG implementation due to their limited time and energy. After addressing the endogeneity problems using the Generalized Method of Moment and lagged variable tests, the main results remain consistent and robust.Research limitations/implications We provide compelling evidence that investor attention serves as a powerful market-based mechanism for driving ESG improvements, suggesting that regulators and practitioners should proactively invest in and communicate sustainability initiatives to attract investors.Originality/value We highlight the importance of sustainability development for investors in bank industry in ASEAN.
Purpose This study investigates how audit characteristics and financial metrics influence shareholder wealth in Thailand's Market for Alternative Investment (MAI), a country where reporting credibility varies widely and investors rely heavily on publicly available signals. The study pays particular attention to the role of audit timeliness and the credibility of earnings in shaping investor reactions.Design/methodology/approach Using a panel of MAI-listed firms from 2016-2024, the study employs structural equation modeling (SEM) to examine the direct and moderating effects of audit lag, profitability measures, leverage, and firm characteristics on market-adjusted total return (MAT). Additional analyses using total return (TR) and market return (MR) provide robustness checks.Findings The results show that longer audit lags are consistently associated with lower shareholder returns. This suggests that audit timeliness serves as a meaningful credibility signal. An unexpected yet revealing finding is that the nonlinear earnings specification (EPS2) exhibits a negative association with MAT, particularly under unusually short audit lag conditions. This pattern implies that investors may interpret high reported earnings with skepticism in a market where earnings quality is uneven. Traditional audit indicators - such as Big 4 status, audit opinion, and Key Audit Matters - have limited explanatory power, while cash-based and margin-based profitability measures remain more reliable.Originality/value This study offers a fresh perspective on how investors in emerging markets interpret financial and audit signals. It shows that the value of earnings and audit information is shaped by institutional context, especially where reporting credibility cannot be assumed. By demonstrating that audit lag both affects investor outcomes and conditions how earnings are interpreted, the study extends agency theory and signaling theory and provides practical insights for regulators, auditors and investors operating in similar emerging-market environments.
Purpose This study aims to analyze how tax investigation, value added tax (VAT) complexity and VAT sanctions affect VAT compliance. It also seeks to determine how national pride moderate the presence of these impacts among Jordanian family small and medium enterprises (FSMEs). Design/methodology/approach In this study, 640 questionnaires were distributed using systematic random sampling to FSMEs in Jordan, after which a total of 358 questionnaires were deemed useable and suitable for analysis. Partial least squares-structural equation modeling (PLS-SEM) was used to validate the measurement model, structural model and the predictive relevance of the study's model. Findings The study found that VAT system complexity reduces compliance, while VAT sanctions and tax investigations increase compliance. Moreover, national pride significantly strengthens the effects of tax investigations, VAT complexity and sanctions on compliance, highlighting the interplay between enforcement measures and socio-psychological factors. Practical implications Policymakers should simplify the VAT system and ensure effective enforcement through sanctions and investigations. At the same time, strategies that foster national pride and civic responsibility could enhance the effectiveness of these measures, encouraging small and medium-sized enterprises (SMEs) to comply voluntarily with VAT regulations. Originality/value This study extends deterrence theory in the context of VAT compliance by demonstrating that national pride plays a moderating role in shaping the compliance behavior of FSMEs. By integrating social identity considerations into a traditionally enforcement-based framework, the study provides a more nuanced explanation of VAT compliance in an emerging economy. In addition, the study highlights the practical suitability of PLS-SEM, for examining extended deterrence models that incorporate moderating effects. The findings offer important implications for both theory development and practice, particularly in designing VAT enforcement strategies that account for behavioral and social factors.
Purpose This study investigates the relationship between data asset disclosure and financial reporting quality (FRQ). Design/methodology/approach This study conducts a multivariate analysis on a panel dataset of Chinese listed companies from 2005 to 2023 to examine the impact of data asset disclosure on FRQ. Findings The empirical results demonstrate a positive relationship between data asset disclosure and FRQ. This result is consistent with the disciplining effects of data asset disclosure, indicating less earnings management at higher levels of data asset disclosure. Mechanism exploration suggests that this effect primarily arises from improved internal control effectiveness, compressed manager opportunism, and enhanced external monitoring. Moreover, the impact is more pronounced in firms that own advanced digital technology capabilities, such as high levels of digitalisation, AI implementation, top management team IT skills, innovation, government subsidies, and operation in data-intensive industries. Originality/value First, this research contributes to the growing literature on the beneficial effects of cutting-edge digital technology drivers on firms' FRQ by providing a novel perspective on data assets. Second, our findings enrich the literature on firms' disclosure of intangible resources, highlighting the role of narrative disclosure on data assets and the implications of FRQ. Third, the mechanism by which the disclosure of data assets functions is also revealed. We present a dual-path framework of data asset disclosure, highlighting that both internal control improvement and increased market scrutiny lead to an improvement in FRQ.
Purpose This study extends prior survival analysis evidence on ESG and firm value persistence by examining whether ESG-related inference is sensitive to linear and nonlinear model specifications. Design/methodology/approach This study uses a sample of Taiwan listed firms from 2016 to 2024, measures firm value using Tobin's Q, and operationalizes firm value persistence by treating the first occurrence of value deterioration as a discrete-time event. Using discrete-time survival analysis (DTSA), the hazard is estimated with machine learning (ML) models under linear and nonlinear specifications, and SHapley Additive exPlanations (SHAP) is used to interpret ESG-related contributions to predicted deterioration risk and implied firm value persistence. Findings The association between ESG indicators and predicted firm value persistence is sensitive to model specification. Under linear specifications, ESG-related directional patterns are more heterogeneous across sector groups, particularly for environmental and governance indicators. By contrast, under nonlinear specifications, the directional patterns are more consistent. Higher environmental, social, and governance indicator scores are generally associated with longer predicted firm value persistence, with governance transparency as the main exception. Originality/value This study offers a methodological and interpretive contribution by integrating DTSA, ML, and SHAP to examine firm value persistence. It shows that model choice affects the interpretation of the association between ESG indicators and firm value persistence. This provides one possible methodological explanation for why prior evidence on ESG and firm value persistence has been mixed.
PurposeThis study examines the impact of digital transformation on the quality and efficiency of internal audit, and uncovers the underlying mechanisms.Design/methodology/approachUsing data from Chinese A-share listed companies spanning 2012 to 2023, we empirically investigate the impact of digital transformation on internal audit.FindingsThe results demonstrate that digital transformation enhances both the quality and efficiency of internal audits; Mechanism analysis reveals that digital transformation affects internal audit through two pathways: human capital and financial channels; The impact is more pronounced in the diversified enterprises and those with low transparency.Originality/valueThis study's results will enrich the relevant studies on the influencing factors of corporate internal audit quality and efficiency, and provide useful references for enterprises to improve the level of internal audit.
PurposeIn global economies, taxation is one of the most significant sources of government revenue aimed at optimal resource allocation, playing a key role in countries' economic growth. Therefore, the primary objective of this study is to investigate the mutual effects of tone management and corporate tax avoidance. Managers can manipulate the tone of information disclosed in corporate reports through biased word selection, reducing the effectiveness of the information provided.Design/methodology/approachThis research utilizes 1,298 observations from 118 companies listed on the Tehran Stock Exchange, covering 2012 to 2022. A simultaneous equations system approach was used for data analysis.FindingsAccording to the results of the simultaneous equations system, tax avoidance negatively and significantly impacts the management of the qualitative disclosure tone. Conversely, tone management negatively and significantly impacts corporate tax avoidance. Additionally, audit quality acts as a moderator that can adjust the impact of tone management on corporate tax avoidance. However, audit quality cannot moderate the effect of tax avoidance on the abnormal tone of board reports. Moreover, supplementary analyses and robustness checks showed that the research findings are not sensitive to alternative operational definitions of tax avoidance. Finally, abnormal historical and industry tones also positively and significantly impact corporate tax avoidance.Originality/valueFurthermore, the analysis of qualitative disclosures as a complementary tool for detecting tax avoidance paves the way for future research that combines textual information with traditional financial data.
PurposeEarnings management through real activities manipulation (REM) or accrual-based earnings management (AEM) is a challenge to the credibility of financial reporting, particularly in emerging markets such as Indonesia. As regulatory enforcement in such settings is often weak, firms rely on internal governance mechanisms to maintain reporting integrity. Therefore, this study investigated the association of internal audit quality (IAQ) with both REM and AEM in publicly listed manufacturing firms.Design/methodology/approachThis study uses a sample of 1,047 firm-year observations from 143 firms between 2016 and 2023. IAQ was assessed using a composite index that captures competence, independence, and performance, while REM and AEM were estimated in accordance with Roychowdhury (2006) and Kothari et al. (2005), respectively. Data were collected from hand-collected annual report disclosures and secondary sources. Feasible generalized least squares regression with firm, year, and industry fixed effects was used to address econometric concerns. To corroborate the results, this study used coarsened exact matching and ordinary least squares regression with robust standard errors.FindingsThe results shows that IAQ was negatively and significantly associated with both REM and AEM. These findings emphasize the role of a high-quality internal audit as an important governance mechanism that constrains opportunistic financial reporting.Originality/valueThis study contributes to the literature by developing a multidimensional IAQ index for archival study, moving beyond prior studies that relied on individual attributes such as the existence, sourcing, or cost of the internal audit function. It also provided novel evidence from Indonesia, where internal audit is mandatory, but governance enforcement remains weak.
PurposeThis paper aims to study the effects of IFRS 9 adoption and the moderating role of rule of law (RoL) on earnings volatility of banks.Design/methodology/approachThe sample consists of banks from 17 G20 countries from 2016 to 2019. Pooled and fixed effect regression analyses are used to test if IFRS 9 adoption, RoL and the interaction effects between them have any significant effects on banks' earnings volatility. Additionally, the Generalised Method of Moments (GMM) was employed to address endogeneity issue and the mediating role of earnings management is examined.FindingsThis study offers three important findings. Firstly, the study finds that banks from high RoL countries in general have lower volatility. Secondly, there is a significant decline in earnings volatility after the adoption of IFRS 9. Finally, the study provides evidence that the relationship between IFRS 9 and earnings volatility is moderated by RoL.Practical implicationsThe findings confirm the effectiveness of IFRS 9 in reducing earnings volatility. They also highlight the importance for countries of weaker institutional quality (low RoL) to complement with stricter accounting standards. However, improving legal or institutional frameworks alone may not be sufficient. Those frameworks must be effective in constraining opportunistic earnings manipulation to have a meaningful impact on earnings volatility.Originality/valueUnlike prior studies that examined market-based volatility or examined the impact on loan loss provision, loan impairments and non-performing loans, this study offers new insights to the effect of IFRS 9 adoption and a country's quality of legal framework on banks' earnings volatility.
PurposeWhile prior literature on relative performance evaluation (RPE) has primarily focused on annual metrics, this study investigates whether quarterly relative performance reversals prompt firms to engage in earnings management to enhance reported annual performance.Design/methodology/approachUsing panel data on Indian-listed firms from 2010 to 2024, this study employs pooled ordinary least squares (OLS) regressions to examine the association between quarterly relative performance reversals and year-end earnings management, proxied by discretionary accruals measured using the modified Jones model. A series of robustness tests is conducted, addressing existing earnings benchmarks, endogeneity, sample selection, and alternative measures of earnings management and relative performance.FindingsThe analysis reveals that firms experiencing quarterly relative performance reversals engage in significantly higher income-increasing discretionary accruals, predominantly concentrated in the second half of the fiscal year. These accruals are strategically timed in response to interim disclosures, suggesting that managers seek to close the performance gap with industry peers. Furthermore, such accrual use is associated with a subsequent decline in operating performance, highlighting the longer-term costs of opportunistic earnings management.Originality/valueTo the best of our knowledge, this is one of the few studies systematically linking quarterly relative performance dynamics to year-end earnings management, emphasizing the need for closer monitoring of interim disclosures as indicators of potential earnings manipulation.
PurposeThis study examines the direct effects of Internal Auditor Empowerment (IAEm) and Internal Auditor Task Complexity (IATC) on Internal Auditor Effectiveness (IAE), as well as the moderating role of External Auditor Cooperation (EAC) in these relationships, within the context of Egyptian listed companies.Design/methodology/approachData was collected through structured questionnaires distributed to financial managers and internal audit managers, and 246 companies participated in pairs. A total of 492 complete questionnaires were analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM).FindingsThe findings reveal that IAEm has a positive influence on IAE, while IATC exerts a significant adverse effect. Moreover, EAC significantly moderates both relationships: it strengthens the positive association between IAEm and IAE and attenuates the negative impact of IATC on IAE. Our additional analysis reveals that larger firms are more effective in managing the Internal Auditor Task Complexity, and the cooperation between External Auditors yields positive outcomes.Research limitations/implicationsThese results underscore the critical importance of empowering internal auditors, effectively managing task complexity, and fostering collaborative relationships with external auditors to enhance audit effectiveness and efficiency.Originality/valueThis research contributes to the internal audit literature by providing empirical evidence on the complex interplay of empowerment, task complexity, and auditor cooperation in shaping internal audit performance, particularly in the underexplored context of Egyptian capital markets.
PurposeDrawing on dynamic capabilities theory (DCT), this study investigates how firms leverage two specific internal capabilities-artificial intelligence in accounting (AIA) and information technology capability (ITC)-to enhance sustainability performance (SUP) within a circular economy (CE) framework. We conceptualize CE activities as a strategic reconfiguration mechanism and ITC as a critical supporting capability.Design/methodology/approachWe tested a moderated mediation model using partial least squares structural equation modeling (PLS-SEM) with observational data collected from 395 large firms listed on the Vietnamese stock market.FindingsThe results indicate that AIA positively influences SUP through the full mediation of CE activities, highlighting a key pathway through which digital capabilities translate into sustainability outcomes. Furthermore, ITC positively moderates the relationship between AIA and CE activities, demonstrating that the effectiveness of AIA in driving CE-oriented reconfiguration is substantially amplified when firms possess strong foundational IT capabilities.Practical implicationsManagers should prioritize developing a synergistic capability structure by integrating AIA deployment with robust ITC to strengthen CE strategies and improve SUP.Originality/valueThis study addresses a significant gap in the DCT literature by offering one of the first empirical investigations into how a specific digital capability (AIA) interacts with a foundational supporting capability (ITC) to shape an environmental strategy (CE reconfiguration) and subsequent performance in an emerging market context. It identifies the capability synergy (AIA x ITC) that enables successful digital-to-sustainability transformation, providing a foundational perspective on how AI can be leveraged to achieve competitive sustainable advantage.
PurposeThe research objective of this paper is to investigate the relationship between real earnings management (hereafter EM) and non-conforming tax avoidance (hereafter TM).Design/methodology/approachThis study employs multiple linear regression analysis to examine the association between real EM and non-conforming TM. The empirical tests are conducted using a sample of US publicly listed firms over the period 1993-2021. To ensure the robustness of the inferences, we perform a series of additional tests.FindingsThe findings reveal a statistically significant positive relationship between real EM and non-conforming TM. This conclusion is further substantiated across a series of robustness checks, which bolster the overall validity of the study. It is noteworthy, however, that the implementation of the Tax Cuts and Jobs Act (hereafter TCJA) could potentially mitigate the observed positive association.Originality/valueThis study contributes to the tax literature by examining the underexplored link between real earnings manipulation and non-conforming tax practices in the US context, thereby complementing the predominant focus on accrual-based EM. Our findings underscore the critical need for investors and regulators to integrate assessments of a firm's real financial reporting aggressiveness into their analytical frameworks. Moving beyond a singular examination of tax reporting practices is essential for enhancing the detection of non-conforming TM behaviors.
PurposeThis study aims to investigate the relationship between government agencies' regulation and analyst forecasts in an emerging market and whether this relationship is mediated by impression management in earnings press releases.Design/methodology/approachThe sample consists of 1,816 quarterly observations of Brazilian listed firms from 2003 to 2021, based on data from Thomson Reuters (R). The impression management of the sample firms is obtained by analyzing their earnings releases using the Watson Natural Language Understanding (NLU) platform developed by IBM (R). We employ a manual firm-level classification procedure to detect regulated and non-regulated firms by government agencies.FindingsBased on structural equation modeling, the findings suggest that firms regulated by government agencies present, on average, lower levels of impression management in earnings press releases. Additionally, we find that the level of firms' impression management, in turn, is negatively related to analyst forecast errors. These empirical results indicate that impression management in earnings press releases is a crucial mediating channel between government agencies' regulation and analyst forecast errors. Moreover, we find that government agencies' regulation has a positive and direct effect on analyst forecast errors, possibly due to its impact on other firm-level incentives and market dynamics, which may be positively or negatively associated with analyst forecasts.Originality/valueThis study contributes to the previous literature on the relationship between government agencies' regulation and analyst forecasts by theoretically discussing and empirically analyzing the mediating role of impression management as an important factor in this relationship, exploring the various facets through which state regulation ends up changing the structure of the informational environment in which companies are located. An important debate for the emerging markets literature is also provided, and policy discussions are featured.
PurposeWhat impact will state-owned capital authorized operation system reform have on the sustained innovation of SOEs? Through what mechanism does it exert its effect? Furthermore, what factors have heterogeneous effects on the relationship between the two? Answering these questions provides an empirical basis for clarifying the role and controversy of state-owned capital authorized operation system reform in improving efficiency.Design/methodology/approachBased on the data of Chinese listed SOEs from 2009 to 2023, this article relies on manually collected "two types of companies" pilot data and employs a multi-period difference-in-differences model to assess the impact of state-owned capital authorized operation system reform on the sustained innovation of SOEs.FindingsThe results indicate that state-owned capital authorized operation system reform significantly promotes the sustained innovation of SOEs. Mechanism analysis finds that specialized division of labor, agency cost, and external salary gap play a partial mediating role between state-owned capital authorized operation system reform and sustained innovation of SOEs. Moderating effect analysis finds that a good internal governance structure and external market environment can strengthen the positive impact of state-owned capital authorized operation system reform on the sustained innovation of SOEs. Heterogeneity analysis shows that in the central and western regions, local SOEs, and SOEs with a high degree of industry competition, the positive impact of state-owned capital authorized operation system reform on sustained innovation is more significant.Originality/valueThe conclusions not only help to deepen SCAOS reform but also provide theoretical references for fostering the long-term competitive advantages of SOEs.
This study aims to provide a comprehensive review of the existing literature on audit report lag (ARL), analyzing the factors influencing ARL, emerging trends and implications for financial reporting timeliness and audit quality. While earlier research established foundational insights into ARL determinants, recent advancements–including advancements in data-driven technology, regulatory changes, managerial behaviors and socio-economic developments–call for a renewed perspective. A systematic review of 81 articles published between 2018 and 2023 was conducted to achieve the study's objective. Building on prior influential studies, such as those by Durand (2019) and Habib et al. (2019), this review extends the analysis of ARL determinants beyond 2017 to capture recent developments and insights. This comparative analysis aimed to highlight overlaps and introduce a new categorization of ARL determinants based on contemporary research findings. Approximately 37% of recent research addresses emerging ARL determinants, including managerial influences such as earnings management, tax avoidance, and managerial overconfidence, as well as external factors such as data-driven technology, IFRS adoption and corporate social responsibility. A new categorization framework identifies ARL determinants across audit firm, company and external levels, emphasizing the growing importance of external factors such as regulatory changes, technological advancements and socio-economic influences, including political connections and cultural norms, on audit timelines and reporting efficiency. This study offers valuable insights for researchers, practitioners and policymakers, enhancing their understanding of the complexities surrounding ARL and its impact on financial reporting timeliness and quality.
PurposeThis study revisits the causal effect of a firm's disclosure quality on the cost of debt in an emerging market, Vietnam, where the regulations regarding corporate disclosure have been upgraded.Design/methodology/approachWe employ least squares dummy variable (LSDV) and difference-in-difference (DiD) estimation with a regulation shock that forces firms to improve their disclosure quality.FindingsHigh disclosure quality firms have lower cost of debt. In addition, due to the regulation change, firms with poor disclosure quality can save around 1% in their cost of debt as their disclosure quality improves. Moreover, better disclosure quality reduces the cost of debt when firms confront heightened uncertainty or tight monetary policy.Practical implicationsThe finding implies that governmental regulations aimed at enhancing information transparency in emerging markets remain effective. Firms that improve their disclosure quality can experience a reduced cost of debt. The study highlights the economic benefits of corporate disclosures and provides insights for policymakers in emerging markets to enhance corporate disclosure standards.Originality/valueBy using the regulation change as an exogenous shock to achieve more precise identification, the paper addresses the limitations of previous studies regarding the endogeneity problem inherent in the relationship between corporate disclosure and market outcomes. Additionally, with a measure of timely disclosure based on an exogenous event, this paper provides reliable evidence on how the timeliness of disclosure affects the cost of debt. Furthermore, while several studies have investigated the relationship between disclosure quality and the cost of debt in developed markets, this research focuses on a bank-based market where loans are more common than bond issuances in corporate financing and where collateral plays a key role in securing loans.
