Purpose This paper aims to attempt to investigate whether firms have a target corporate cash holding (CCH) as well as determining firms speed of adjustment towards targeted corporate cash holding (SOA-CCH) and finally analysing firms performance impact on SOA-CCH. Design/methodology/approach The study is based on 2320 Indian-listed firms using data from 2000 to 2022. A panel data approach is used to examine the impact of firm performance on cash holding and the SOA. The models used are pooled OLS, fixed effect and generalised method of moments (GMM). Findings The results reveal that firms are only capable of reducing the discrepancy between their current and optimal liquidity levels by 48.3% within a year, which suggests that the adjustment process is imperfect. Firm performance and SOA are associated positively in India and adjustment speed is highly sensitive to firm performance. It is found that big firms have higher cash holding as compared to small firms. It is also found that SOA is highly sensitive in times of financial crisis (GFC 2008) as compared to health crisis (Covid-19). Practical implications The study offers valuable implications for diverse stakeholders. For investors, particularly those focused on dividend income, a firm’s SOA-CCH serves as a critical factor in shaping dividend policies. Regulators can view SOA-CCH as a mechanism to ensure firms meet investor expectations and fulfil debt obligations. From a managerial perspective, under the agency theory framework, higher SOA-CCH combined with strong financial performance can influence compensation and fiduciary incentives. For owners, both high and low SOA-CCH hold significance, as they inform investment and financing decisions that maintain financial stability and long-term sustainability of the firm. Originality/value This paper contributes to the body of literature by attempting to offer a thorough analysis on the nexus between the firm performance and SOA of CCH. Additionally, the uniqueness of the paper lies in its attempt to analyse the effect of firm performance on SOA-CCH during normal as well as crisis periods such as GFC 2008 and COVID 19 crisis. The results depict that firms were more robust in reaching a financial safe position during the global financial crisis than the global pandemic crisis. The paper also examined sensitivity of adjusting their SOA-CCH by big and small firms.
Purpose This study aims to examine whether smart city policies influence corporate digital transformation. Using China’s National Smart City Pilot Project as a quasi-natural experiment, we investigate if smart city designation affects firms’ digitalization levels as reflected in their Management Discussion and Analysis (MD&A) disclosures. Design/methodology/approach This study aims to use a smart city quasi-natural experimental design and investigate its role on firms’ digitalization by using textual analysis of MD&A disclosure. Cross-sectional tests, supportive channel analyses (examining government procurement, investment and innovation) and a “talk-versus-action” test are conducted to validate the findings. Findings Smart city designation is positively associated with digitalization-related MD&A disclosure. This effect is stronger for non-SOEs, firms in less competitive industries and those in Eastern regions. Mechanism tests indicate government digital procurement, digital intangible assets and digital innovation as key channels. Crucially, increased disclosure predicts subsequent substantive digital investment and innovation, not mere symbolism and improves internal control quality while reducing real earnings management. Originality/value This paper provides novel evidence on the spillover effects of smart city initiatives on micro-level firm behavior. It demonstrates that smart city policies extend beyond municipal infrastructure to catalyze substantive corporate digital transformation and enhance the information environment, offering insights into the real economic consequences of urban digitization policies.
Research This study aims to determine the effect of promotion costs and general administrative costs on net profit in cosmetics and household needs companies. to Net Income in cosmetics companies and household needs listed on the Indonesia Stock Exchange (IDX) for the period 2020-2023, both the influence partially and simultaneously. The research method used in this research This research is a descriptive and associative method with a quantitative approach. This study uses secondary data, namely the financial statements of PT Victoria Care Indonesia Tbk, PT Martina Berto Tbk, PT Unilever Indonesia Tbk, and PT Kino Indonesia Tbk. Period 2020-2023. The data analysis technique used is multiple linear regression test, partial test (t test) and partial test (t test). partial test (t test) and simultaneous test (F test). The results showed that partially the variable Promotion Costs and General Administration Costs have no effect on Net Income. effect on Net Income. Simultaneously promotion costs and general administration costs Promotion costs and general administrative costs affect net profit in cosmetics companies and household needs listed on the Indonesia Stock Exchange (IDX) for the period of 2020-2023.
This study aims to examine the effects of capital, education level, and financial literacy on the income of Micro, Small, and Medium Enterprises (MSMEs) in Bengkalis Regency. A quantitative approach was employed using a survey method involving 390 MSME actors selected through purposive sampling. Data were collected through structured questionnaires and analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The results indicate that capital, education level, and financial literacy have positive and significant effects on MSME income, with financial literacy emerging as the most dominant factor. These findings suggest that, beyond traditional production factors, the ability to effectively manage financial resources plays a critical role in enhancing business performance. This study contributes to the literature by integrating production theory and human capital theory in explaining MSME income, while also highlighting the importance of financial literacy in the context of small businesses in regional economies. Practically, the findings underscore the need to strengthen financial literacy and human resource capacity as strategic approaches to improving MSME income.
This study aims to analyze the influence of tax policies on business marketing activities in modern retail companies, specifically Indomaret. As one of the largest minimarket chains in Indonesia with thousands of outlets spread across Indonesia, Indomaret faces various tax policies, such as Value Added Tax (VAT), income tax, and digital tax regulations, which impact the company's operations and marketing strategies. Tax policies, particularly the implementation of an 11% VAT on retail products, directly impact product pricing and consumer purchasing power. This situation encourages the company to adjust its marketing strategies, such as price promotions, discounts, and advertising cost efficiency, to maintain competitiveness in the market. Furthermore, Indomaret also utilizes its extensive network as part of its service marketing strategy, including providing tax payment facilities for the public, which enhances brand image and consumer trust. The research method used a quantitative approach, with data collection techniques through consumer and business surveys, as well as literature studies related to tax policies and retail marketing. Data analysis was conducted to measure the relationship between tax policy variables and marketing activities, such as pricing, promotion, and distribution strategies. The results indicate that tax policies have a significant influence on business marketing activities at Indomaret. Increasing tax burdens tend to encourage companies to adjust pricing and promotional strategies to remain competitive. Furthermore, tax policy also encourages marketing innovation, particularly in the use of additional services and digitalization to attract consumers. The conclusion of this study indicates that tax policy is a critical external factor in determining retail marketing strategies. Therefore, Indomaret needs to integrate tax planning with its marketing strategy to increase business effectiveness and maintain customer loyalty.
Purpose This study aims to examine how disclosing engagement quality reviewer (EQ reviewer) information influences investors’ perceptions of financial reporting quality through the lens of the earnings response coefficient, with the aim of highlighting the role of such audit disclosures in enhancing market confidence and the credibility of financial statements. Design/methodology/approach Using data on EQ reviewer disclosures by all Chinese A-share listed companies from 2020 to 2022, this study uses regression models to examine the impact of disclosing EQ reviewer information on investors’ perception of financial reporting quality. Findings Disclosing EQ reviewer information significantly enhances investors’ perception of earnings quality, a result robust to multiple tests. Heterogeneity analyses indicate that this effect is stronger among companies with superior governance and those audited by large audit firms. Furthermore, EQ reviewers possessing audit experience, engagement quality review expertise, industry-specific knowledge and higher education levels positively signal earnings quality, whereas overburdened reviewers diminish it. Originality/value This study offers novel insights into the literature on audit transparency and earnings quality. They underscore the critical role of reviewer-specific disclosures, providing implications for how audit firms strategically assign EQ reviewers, how companies can enhance their disclosure policies and how regulators and investors might better use auditor-specific information in assessing financial reporting credibility.
This study examines the effect of financial conditions, proxied by solvability, profitability, and liquidity, on audit report lag in non-primary consumer goods companies listed on the Indonesia Stock Exchange during the 2020–2022 period. The study employs a quantitative approach using secondary data obtained from audited financial statements, with a total of 321 firm-year observations selected through purposive sampling. Multiple linear regression analysis is applied to test the proposed hypotheses. The results show that solvability has a positive and significant effect on audit report lag, indicating that firms with higher leverage tend to experience longer audit delays due to increased audit complexity and risk. In contrast, profitability and liquidity have negative and significant effects on audit report lag, suggesting that firms with better financial performance and stronger liquidity positions tend to complete the audit process more efficiently and report in a more timely manner. These findings support agency theory and signaling theory, highlighting that financial risk and performance serve as important determinants of audit timeliness. Firms with higher financial risk are associated with longer audit delays, while firms with stronger financial conditions provide positive signals that encourage timely reporting. This study contributes to the literature by providing sector-specific evidence from the non-primary consumer goods industry in Indonesia during the post-pandemic period. The findings also offer practical implications for management, auditors, and regulators in improving the efficiency and timeliness of financial reporting in emerging markets.
Penelitian ini bertujuan untuk mengkaji perbandingan kondisi keuangan perusahaan maskapai penerbangan sebelum dan sesudah masa pandemi Covid-19. Metode yang dipakai adalah pendekatan kuantitatif dengan rancangan komparatif, menggunakan data sekunder sebagai sumber informasi. Temuan studi ini mengindikasikan bahwa tidak ada perbedaan signifikan pada rasio lancar (Current Ratio) dan imbalan investasi (Return on Investment) antara periode sebelum dan setelah pandemi. Akan tetapi, rasio utang terhadap ekuitas (Debt to Equity Ratio) menunjukkan adanya perbedaan yang bermakna di kedua periode tersebut.
Purpose The purpose of this paper is to examine the relationship between data resource information disclosure and stock price crash risk. Design/methodology/approach Drawing on information asymmetry and signaling theories, this study explores the relationship between data resource information disclosure and stock price crash risk. It further conducts a moderating effect analysis, mechanism testing and economic consequence analysis. Findings The findings reveal that data resource information disclosure reduces stock price crash risk. The moderating effect analysis indicates that positive media coverage strengthens the negative relationship between data resource information disclosure and stock price crash risk, whereas negative media coverage weakens it. Mechanism testing shows that data resource information disclosure mitigates stock price crash risk by reducing information asymmetry. The analysis of economic consequences suggests that such disclosure promotes high-quality corporate development by reducing stock price crash risk. Heterogeneity analysis reveals that the mitigating effect of data resource information disclosure on stock price crash risk is more pronounced in samples with less patient capital. Originality/value This paper reveals the guiding effect of corporate data resource information disclosure on investor behavior and expands the dual role of media coverage in the realm of data resources.
Purpose This study aims to investigate the relationship between financial constraints and fraud and the readability of financial statements in the listed companies on the Iranian stock exchange. Design/methodology/approach A multiple regression is used to test the hypotheses. A sample of 1,351 observations from the stock exchange from 2015 to 2021 tests hypotheses via a multiple regression model based on the panel data and fixed effect model. Findings Findings show that financial constraints negatively and significantly impact reporting readability. Moreover, the results indicate that financial constraints can motivate companies to engage in further fraudulent reporting. Originality/value To the best of the authors’ knowledge, this is the first study to address this issue in emerging markets. It provides helpful insights concerning the financial constraint and its impact on fraud and readability for users of financial statements, analysts and legal institutions. Results enormously help to develop knowledge and narrow the literature gap.
Purpose The study aims to examine how the presence of female directors influences corporate tax avoidance behaviour and investigates whether female representation on the audit committee moderates this relationship.Design/methodology/approach Drawing on social role and social identity theory, this study argues that perceived communal traits (e.g., ethical awareness, risk aversion) of female directors and their shared group identity collectively enhance corporate accountability and ethical compliance by constraining tax avoidance practices. Based on data from listed financial firms in Bangladesh, an emerging economy, over the period 2016-2024, the study employs linear regression analysis to test these hypotheses.Findings The empirical findings indicate that a higher proportion of female directors is associated with lower levels of corporate tax avoidance. Moreover, the negative association between board gender diversity and tax avoidance is strengthened by female representation on the audit committee. Additional analysis confirms that these findings are contingent on the presence of at least two female directors on the board, which aligns with the notion of critical mass theory. To ensure robustness, alternative measures of tax avoidance and board gender diversity are employed, and endogeneity concerns are addressed using lagged regression, the Heckman two-step method and entropy balancing. Further evidence suggests that earnings management may serve as a potential channel linking board gender diversity to lower levels of tax avoidance.Practical implications The study highlights the significance of promoting female participation on boards and audit committees to curb tax avoidance tendencies. It enhances understanding of how female directors' perceived communal traits and shared group identity contribute to stronger ethical oversight and corporate governance. The study also suggests that regulators may consider mandating at least two women on corporate boards to strengthen governance effectiveness.Originality/value This study contributes to the literature on gender diversity and tax avoidance in the context of an emerging economy. Notably, it fills a research gap by investigating the moderating role of female representation on the audit committee in curbing tax avoidance in the financial sector.
Purpose This study examines how board size shapes firms’ investment efficiency by addressing the conflicting theoretical and empirical predictions in the corporate governance literature. Specifically, it investigates whether the relationship is non-linear and identifies the point at which board size enhances or impairs capital allocation decisions. Design/methodology/approach This study uses an international panel dataset of 20,590 firm-year observations across 32 countries from the LSEG and World Bank databases. The empirical analysis employs panel regression models with firm and country-level controls, complemented by robustness tests using two-stage least squares (2SLS) and system generalised method of moments (system GMM) to address endogeneity and dynamic effects. Findings The results reveal a significant inverse U-shaped relationship between board size and investment efficiency. Board size enhances efficiency at lower levels, but beyond an optimal threshold of approximately 15 directors, additional members reduce efficiency. This pattern reflects a trade-off between improved monitoring and resource provision, and increased coordination costs and decision inefficiencies. The effect is stronger in developed markets and high-competition environments, and weaker in emerging and non-common law settings. Research limitations/implications This study contributes to the corporate governance literature by reconciling conflicting theoretical predictions through a non-linear framework. The result demonstrates that the impact of board size on investment efficiency is not monotonic and provides an explanation for the mixed empirical evidence reported in prior studies. Practical implications This study provides valuable insights for policymakers, emphasising the importance of carefully considering the limit on board size as an important corporate governance mechanism. Firms should align board size with the optimal range to balance monitoring effectiveness and coordination costs, particularly in competitive and well-developed institutional environments. Furthermore, this study assists investors in evaluating governance quality by highlighting the performance implications of board structure. Originality/value This study makes a novel contribution by being the first to identify and quantify the optimal board size that maximises investment efficiency using a large multi-country dataset. By shifting the focus from linear to non-linear effects, it offers a more complete understanding of how board structure influences firms’ investment decisions.
Purpose This study aims to examine the degree of preparedness of companies subject to the first wave of implementation of the Corporate Sustainability Reporting Directive (CSRD), assessing the extent to which they have adopted new reporting practices that significantly depart from previous requirements. It also examines the factors explaining differences in preparedness across companies.Design/methodology/approach The empirical setting comprises Portuguese listed companies subject to the CSRD from 2024 and uses content analysis of corporate reports to assess the implementation of the required sustainability reporting practices. A score was developed to capture the level of preparedness, and multivariate analysis was performed to examine its determinants.Findings There are differences in preparedness among companies in the first wave of CSRD implementation operating within the same securities market, with companies included in a benchmark stock index adopting most new sustainability reporting requirements as early as 2023. Company size and inclusion in a benchmark index act as key drivers of earlier and more comprehensive adoption.Social implications The findings demonstrate how the CSRD is implemented at a micro level within a national context. The identified determinants of companies' preparedness can support the design of policies and guidance that facilitate the transition to more stringent sustainability reporting practices.Originality/value The reporting practices are analyzed over a three-year period (2021-2023). To the best of the authors' knowledge, the effect of inclusion in a benchmark stock market index on corporate reporting practices is examined for the first time and is confirmed as a determinant of the level of preparedness for the CSRD.
Purpose Based on agency and incomplete contract theories, the purpose of this study is to explore the impact of accounting residual control rights on earnings management and the moderating effect of managerial entrenchment. Design/methodology/approach This study uses A-share listed companies in Shanghai and Shenzhen from 2007 to 2023 as the sample and uses multiple regression analysis to test the hypotheses. Findings The results of this study show that accounting residual control rights significantly exacerbate both accrual-based and real earnings management. Further analysis by distinguishing the direction of earnings management reveals that this exacerbating effect is more pronounced for negative earnings management. Managerial entrenchment positively moderates the relationship between accounting residual control rights and both types of earnings management. Further examination of the direction of earnings management reveals that the moderating effect of managerial entrenchment is particularly strong in the negative earnings management dimension. Further analysis from the perspective of managerial heterogeneity shows that, compared with integrated and independent managers, the degree of entrenchment among dependent managers has the most prominent positive moderating effect on the relationship between accounting residual control rights and earnings management. Originality/value This study deepens the understanding of managers’ motivations for earnings management behaviors and clarifies their role in corporate governance, which is a useful supplement to the literature on accounting residual control, managerial entrenchment and earnings management.
Purpose This study investigates the ethical and effective integration of Explainable Artificial Intelligence (XAI) into public sector audit systems in developing economies, using the Ghana Audit Service as a focal case. It responds to the critical governance challenge posed by opaque “black-box” AI models, which threaten transparency, legal defensibility and institutional accountability in high-stakes public audits. By addressing the interpretability gap, the study aims to ensure that AI-generated findings are not only technically robust but also publicly justifiable and democratically aligned. Design/methodology/approach A sequential explanatory mixed-methods design was employed. Quantitative experiments compared auditor trust, decision accuracy and perceived legal defensibility between XAI-enhanced and standard AI systems. Qualitative interviews and focus groups explored contextual factors, cognitive processes and governance implications of XAI adoption in public auditing. Findings Auditors using XAI-enhanced systems reported significantly higher trust, improved decision accuracy and stronger perceptions of legal defensibility compared to those using noninterpretable AI. Crucially, perceived explainability emerged as a key mediator between AI use and audit performance, while prior AI-related training significantly amplified trust in XAI outputs. These findings underscore the importance of interpretability and capacity-building in driving effective AI adoption. The study also revealed institutional and socio-technical enablers and barriers influencing XAI integration within Ghana’s public audit context. Practical implications The findings have significant implications for digital governance, especially in developing countries. By demonstrating that XAI can enhance trust, accuracy and legal defensibility in audits, the study supports policy reforms to embed explainability into AI governance frameworks. For practice, it underscores the need for structured auditor training and interdisciplinary collaboration between technologists, auditors and legal experts. The proposed framework can guide the Ghana Audit Service and similar institutions in adopting AI systems that meet both performance and accountability standards, ultimately strengthening transparency, reducing corruption risks and safeguarding democratic oversight in high-stakes public sector audits. Originality/value To the best of the author’s knowledge, this study provides one of the first empirical examinations of XAI integration in public sector auditing within a developing-country context. It delivers a context-aware framework that combines technical explainability with institutional governance safeguards, offering practical guidance for policymakers, audit institutions and AI developers to enhance transparency, fairness and public trust in AI-assisted audits.
Purpose - This study aims to examine how CEO gender expectancy violations, such as when a CEO is female rather than the expected male, affect investors' judgments. Despite diversity initiatives, female CEOs remain rare in the corporate world. Based on the expectancy violation theory (Burgoon, 1993) and role incongruity theory (Eagly and Karau, 2002), we predict that when investors expect a male CEO but observe a female CEO instead, they are prompted to verify her legitimacy by examining the company's performance more closely. Design/methodology/approach - We conduct a 2 x 2 between-subjects experiment with online participants, where we manipulate the CEO's gender (male vs female) and the company's performance quality (high vs low). Findings - We find that when the CEO is female and unexpected, investors analyze the company's financial performance more carefully and are more likely to differentiate between high- and low-quality performance compared to when the CEO is male. Practical implications - This study contributes to the accounting literature by showing a potential benefit of gender diversity in corporate leadership for enhancing investors' ability to distinguish performance quality. As companies are recruiting increasingly diverse leadership, this can lead to improved investor decision-making during the transition phase. Originality/value - We use AI-generated images to manipulate CEO gender while holding all other attributes constant across conditions. This study is among the earliest accounting studies to use this method, and future studies can use our manipulation. In addition, we introduce a novel method for measuring individuals' expectations about a person's gender.
Purpose This study aims to investigate how lone-founder firms and family firms influence earnings management practices and examines whether the presence of female directors moderates these relationships. Design/methodology/approach Using a sample of 3,971 firm-year observations from non-financial firms listed on the Pakistan Stock Exchange between 2012 and 2024, the study uses ordinary least squares regression to test the baseline hypotheses. Multiple robustness checks, including fixed effects, generalized method of moments (GMM), two-stage least squares (2SLS), entropy balancing and Heckman correction, are conducted to address endogeneity and selection bias. Findings Drawing on agency theory and the socioemotional wealth (SEW) perspective, the authors report that lone-founder firms are positively associated with earnings management practices. In contrast, family firms are negatively associated with them. Moreover, the presence of female directors weakens the positive relationship between lone founder firms and earnings management practices and strengthens the negative relationship in family firms. The findings, robust across multiple estimation methods including fixed effects, dynamic GMM and 2SLS, confirm that these relationships hold after accounting for endogeneity and sample selection biases. Research limitations/implications The study focuses on a single emerging-market context, Pakistan, where ownership concentration and social norms may differ from those in other institutional settings. Future research could examine other ownership types (e.g. institutional or state ownership) and other dimensions of board diversity (e.g. nationality, education) as additional moderators. Practical implications The findings highlight the importance of differentiating among ownership structures when assessing financial reporting quality. Policymakers and regulators can rely on these insights to promote stronger governance reforms, including gender diversity requirements for boards. For investors, the results provide a deeper understanding of how founders influence and how family control shapes financial transparency. The study also supports ongoing global initiatives, including United Nations Sustainable Development Goal (UNSDG) 5, by demonstrating the positive impact of female directors on governance. Social implications The study underscores the value of inclusive governance, demonstrating that female directors play a significant role in enhancing financial transparency and reducing earnings manipulation. These findings support broader societal efforts to promote gender equality, particularly in male-dominated emerging markets and reinforce the importance of implementing gender quota policies. By demonstrating the positive impact of women’s participation in strategic decision-making, the study advances UNSDG 5 (gender equality). It encourages firms to embrace more diverse, socially responsible governance practices. Originality/value To the best of the authors’ knowledge, this study is the first to empirically distinguish lone-founder firms from family firms in explaining earnings management practices in an emerging market. It highlights the central role of SEW in limiting earnings manipulation in family firms. The study also provides clear evidence that female directors enhance strategic decision-making and reduce earnings management practices, underscoring women’s effective participation in line with UNSDG 5.
PurposeThis study aims to explore how CEO social capital (CEOSC) influences corporate greenwashing behavior, with a particular focus on the moderating role of environmental responsiveness in Chinese A-share listed firms. It also aims to examine whether socially embedded chief executive officers (CEOs) are more or less likely to engage in deceptive sustainability disclosures.Design/methodology/approachUsing a panel data set of Chinese A-share firms from 2014 to 2022, this study constructs a composite index of CEOSC based on political, business, and academic ties. Fixed effects regression is used as the baseline model. Robustness is confirmed through alternative variable measures and econometric techniques, including two-stage least squares (2SLS), Heckman's two-stage selection model, two-step generalized method of moments (GMM), and difference-in-differences (DID) analysis.FindingsThe findings show that CEOSC significantly reduces greenwashing behavior. Furthermore, environmental responsiveness both directly lowers greenwashing and amplifies the negative effect of CEOSC on it. DID results also revealed that firms in high-polluting industries increased their greenwashing after the implementation of China's Environmental Protection Tax Law in 2018, indicating that this was a case of policy-induced symbolic compliance.Originality/valueThis study is among the first to integrate social network theory with environmental governance by linking CEOSC to greenwashing. It contributes to the green governance literature by highlighting the contingent role of environmental responsiveness. The findings provide practical insights for firms, regulators, and policymakers.
PurposeEconomic policy uncertainty (EPU) has become a defining challenge for global corporate decision-making. The purpose of this study is to examine how firms' subjective perceptions of economic policy uncertainty influence their debt financing decisions.Design/methodology/approachUsing China as a strategic research context - representing a large, bank-dominated economy with significant internal heterogeneity - this study adopts the firm-level EPU perception index (FEPU) developed by Nie et al. (2020) based on textual analysis of annual reports. Panel data from 2011 to 2022 are analyzed using robust causal inference techniques, including two-way fixed effects, mediation and instrumental variable approaches. The study tests dual transmission channels and explores multidimensional heterogeneity.FindingsThis study finds that heightened perceptions of EPU significantly reduce debt financing. This effect operates through two distinct, parallel channels: suppressing investment demand and tightening financing supply by exacerbating information asymmetry. Notably, the negative impact is most pronounced among firms in financially underdeveloped regions, non-technology-intensive industries, those without strong bank ties and those in the growth stage, revealing a clear structural bias in the transmission of uncertainty shocks.Originality/valueThis study makes two key contributions. First, it shifts the measurement paradigm from macroeconomic proxies to micro-level subjective perceptions, enabling a more direct examination of how uncertainty is internalized by firms. Second, it offers a refined theoretical framework that details the concurrent "demand-supply" transmission mechanism and maps its heterogeneous effects. The findings provide valuable, generalizable insights for policymakers and firms in similarly structured economies navigating uncertainty.
PurposeBeyond financial statements, markets respond to the stories firms tell about technological progress. This study aims to investigate whether industrial robot innovation, as a highly visible signal of smart manufacturing, enables managers to craft persuasive narratives and use an abnormally positive tone to shape investor expectations in earnings conference calls.Design/methodology/approachUsing a sample of China A-share listed firms from 2012 to 2022, the authors empirically examine the effect of industrial robot innovation on managers' abnormally positive tone and the underlying mechanisms.FindingsThis study finds that greater industrial robot innovation leads to more abnormally positive managerial tone in earnings calls, especially under optimistic analyst forecasts or low executive pay. It boosts positive language, reduces negative words and extends Q&A interactions. While this can fuel excessive investor optimism and stock mispricing, firms use robot innovation mainly as a narrative tool rather than for earnings management, as tone management rises while real earnings manipulation declines, indicating a governance effect of technological innovation.Originality/valueThis study extends the literature on technological innovation and managerial narrative, offering practical implications for executives and investor relations departments.
