Journal of Accounting in Emerging Economies

Moradi, Mahdi; Salehi, Mahdi; Tarighi, Hossein; Saravani, Mahdi

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-07-2019-0145

Independent auditors play an important role in increasing the reliability of financial information by giving their professional opinion on the financial statements of business units. Therefore, the purpose of this study is to investigate the relationship between the audit adjustments and financing of companies.Design/methodology/approachThe sample of the study includes 173 Iranian companies listed on the Tehran Stock Exchange (TSE) between 2010 and 2017.FindingsThere is no significant association between the profit incremental audit adjustments (Disagreement) and financing of companies in the current year and the following year through a loan. Furthermore, there is no meaningful relationship between the earnings downward/upward audit adjustments (Disagreement) and the financing of companies in the current year and the following year through ordinary stocks. However, there is a meaningful relationship between the profit downward audit adjustments (Disagreement) and the financing of firms in the current year through a loan. In general, as Iran's economy is facing severe economic sanctions, the existence of a high inflation rate has led to a steady increase in the stock prices of Iranian companies; hence, investors regardless of audit reports prefer to invest their money in the stock market so that it does not lose its purchasing power. Under these disaster economic circumstances, creditors are less willing to lend to companies with lower profits.Originality/valueThe results of the current study extend the knowledge of previous studies as financial pressures from economic sanctions have both positive and negative psychological effects on corporate financing.

Rashid, Md Mamunur

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-10-2019-0199

The purpose of this study is to examine the effect of board characteristics on foreign equity ownership (FEO) in the listed public limited companies of Bangladesh.Design/methodology/approachThe study collected data from 418 annual reports of listed companies of Bangladesh for the years 2015, 2016 and 2017 to examine the effect of board characteristics on FEO. Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS) regression methods are used to test the hypotheses of the study.FindingsThe results show that board size has significant negative influence on FEO. Other board characteristics variables such as board independence and female directorship appear to have an insignificant influence on FEO. However, several firm characteristics variables such as return on assets, market-to-book ratio, firm size and firm age have a significant positive relationship with FEO. While presenting the regression results separately for manufacturing and non-manufacturing firms, the findings reveal a number of differences in the results between the two sectors.Research limitations/implicationsThe major limitation of the study is that it concentrates only on three years annual report data in analyzing the hypothesized relationships.Practical implicationsPolicy makers, regulators and top management can get meaningful insights with respect to optimal board structure and firm characteristics to attract foreign investors as the results revealed significant effects of several board and firm characteristics variables on FEO.Originality/valueThe present study includes the presence of female directors on the board to represent board characteristics. No other study has examined the relationship between FEO and female directors.

Osinubi, Igbekele Sunday

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-07-2019-0139

This study explores the effects of the three pillars of institutional theory in shaping the activities of institutional entrepreneurs and other social actors during International Financial Reporting Standards (IFRS) implementation in Nigeria.Design/methodology/approachThis study uses a document analysis method to achieve the objectives of the study.FindingsThis study finds that IFRS implementation in Nigeria witnessed some progression from regulative to normative to cognitive pillar building. The regulation on IFRS implementation was initiated top-down rather than through lobbying from professional accounting bodies and the public. Changes in the regulatory framework brought some improvement to corporate financial reporting practices such as the timing of corporate filings of audited financial reports. However, the implementation process is laden with conflicts and power struggle among institutional actors. These conflicts and power struggles led the President of Nigeria to sack the Board of the Financial Reporting Council of Nigeria (FRC), the reconstitution of the Board and appointment of a Chairman for the Board of the FRC.Practical implicationsIFRS implementation process resulted in power redistribution among institutional actors, which led to resistance, tensions and conflicts among institutional actors. The conflicts arise from the need of actors to legitimate their activities and secure their positions. The three institutional pillars are key components of a change process and the actor's social position affects their capability to act as an institutional entrepreneur.Originality/valueThis finding should provide foundational knowledge that will inform practitioners, researchers and regulators in developing countries on how institutional actors shape the approach to corporate reporting regulations.

Lubbe, Ilse

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-01-2020-0017

The purpose of this paper is to provide a contextual analysis of the professional accounting education system of South Africa (SA).Design/methodology/approachThe paper uses the Global Model of Accounting Education (Watty et al., 2012) to describe the accounting education system of SA, which is then compared with similar case studies of Australia, Japan and Sri Lanka. Information about the SA accounting education system is contextualised from multiple sources, using data triangulation.FindingsSeveral similarities between the SA accounting education system and that of Australia are found, such as the role and involvement of the professional bodies in the accreditation processes, with less similarities with that of Japan and Sri Lanka. The comparisons illuminate the economic development of each country and the level of involvement in the education programmes by the profession. Specific challenges in SA include the entrance hurdles to higher education and emphasis on an accounting degree.Practical implicationsThe application of the Global Model of Accounting Education helps to identify the similarities in the global accounting arena and illuminates the uniqueness of the SA accounting education system. This study illustrates the establishment of an accounting education system that aligns with the International Education Standards (IESs).Originality/valueThe study contributes to the discussions around challenges in accounting education, specifically those associated with accreditation and a strong controlling relationship between academe and the profession.

Adhariani, Desi; du Toit, Elda

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-10-2019-0194

This study aimed at investigating the readability of sustainability reports in Indonesia. The Indonesian government, through the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan [OJK]), has issued regulation POJK 51/2017 concerning the implementation of sustainable finance, which requires public companies to prepare sustainability reports—either stand-alone reports or parts of annual reports. Until 2017, only 30% of the top public companies in terms of market capitalisation issued the required report. Companies' decisions to provide the report stem from the greater visibility and access to resources that flow from additional narratives. However, the usefulness of such a report can be questioned.Design/methodology/approachWe used several linguistic techniques (Flesch Reading Ease [FRE], Flesch–Kincaid, and Gunning Fog measures) to evaluate the readability of sustainability reports. The analysis was performed using a software application called “Readability Studio 2015.”FindingsWe found the reports to have a low level of readability. This means that the information provided in the disclosures are very difficult to decipher and understand by the targeted users. Considering the similar levels of report readability in companies across industries, we observe a pattern of isomorphism in the way companies have implemented the same format and language construct in disclosing their sustainability information. They might apply the myth that complex language attracts investors or impresses others.Research limitations/implicationsThe techniques to measure readability that we use might not capture the whole dimensions of readability and understandability, especially in the non-English language.Practical implicationsThe results from this study can be used as evaluation tools for companies and regulators in preparing more intelligible and readable sustainability reports, as mandated by POJK 51/2017.Social implicationsSustainability reports act as a medium of accountability for a company's sustainable production and operations. Their usefulness for investors and other users often depends on the readability of the information.Originality/valueThe readability of sustainability reports in the context of Indonesia as an emerging market has not been comprehensively investigated in previous research. This study is among the first of its kind to support the quality enhancement of the reports.

Saleh, Mohammed W.A.; Shurafa, Rabee; Shukeri, Siti Norwahida; Nour, Abdulnasr Ibrahim; Maigosh, Zaharaddeen Salisu

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-12-2019-0231

The purpose of this study is to empirically examine the effect of board multiple directorships and chief executive officer (CEO) characteristics on firm performance among nonfinancial firms listed on the Palestine Security Exchange (PSE) during the period from 2009 to 2016.Design/methodology/approachBased on 200 observations, this study utilizes panel data to examine the effect of the predictors on firm performance measured by return on assets. The analysis is repeated using the return on equity and two regression methods to evaluate the robustness of the main analysis (pooled regression, and backward stepwise regression analysis).FindingsThe results show that the “busyness” of a CEO reduces their effectiveness and is associated with losses in the companies where they are in charge. On the other hand, the results show that CEO tenure, CEO experience and CEO political connections have a positive effect on corporate performance.Originality/valueThis study is timely given that the practice of multiple directorships is widely common among firms in developing countries. Prior research in Palestine has not investigated the role of multiple directorships and the CEO characteristics on corporate outcomes. This study provides a picture of the potential benefits to firms, policymakers and professional bodies from considering CEO variables. The findings of such an examination can help them to set up suitable policies and enhance the role and the quality of the CEO in firms.

Diab, Ahmed; Metwally, Abdelmoneim Bahyeldin Mohamed

2020 Journal of Accounting in Emerging Economies

doi: 10.1108/jaee-11-2019-0214

The study aims to investigate the appearance of corporate social and environmental responsibility (CSER) practices in a context where economic, communal and political institutions are highly central and competing with each other.Design/methodology/approachTheoretically, the study draws upon the institutional logics perspective and the theoretical concepts of logics centrality and compatibility to understand how higher-order institutions interact with mundane CSER practices observed at the case company's micro level. Empirical data were solicited in an Egyptian village community, where fishing, agriculture and especially salt production constitute the main economic activities underlying its livelihood. A combination of interviews, informal conversations, observations and documents solicits the required data.FindingsThereby, this study presents an inclusive view of CSER as practiced in developing countries, which is based not only on rational economic perspectives – as is the case in developed and stabilised contexts – but also on social, familial and political aspects that are central to the present complex institutional environment.Originality/valueThe reported findings in this study highlight the role of non-economic (societal) logics in understating CSER in African developing nations.