In this paper, we review and critique the use of institutional theory in social and environmental accounting (SEA) research and discuss whether this has helped or hindered in furthering a critical research programme that is concerned with questions of power and emancipation. This research focus is warranted by broader debates within institutional theory as well as the SEA literature. Insofar as institutional theory is concerned, there are disagreements as to whether this theory can be imbued with critical intent or whether it is trapped in a normal science tradition of constantly extending and refining theory that detracts from such intent. By contrast, within the SEA literature, we find a largely inverse criticism suggesting that its lack of theoretical sophistication has diminished its critical potential. We show that most institutional research on SEA under review has not advanced research in a critical direction. However, this has little to do with the normal science ideal underpinning institutional theory but is rather due to the failure to keep up with key conceptual developments crystallising its critical potential. We outline a research agenda that may turn institutional research on SEA into a more critical research programme while simultaneously developing institutional theory conceptually.

This study examines two credibility-enhancing tactics when managers use Twitter as a platform to disclose a message about an employee training programme, which is an important dimension of corporate social responsibility (CSR). I conduct an experiment where I manipulate (1) whether a firm’s CEO retweets the company disclosure tweet in their personal Twitter account (hereafter, ‘retweeting’), and (2) whether the company’s tweet mentions the organisation that cooperates with the company’s CSR activities when the organisation, as an involved party, has a verified Twitter account (hereafter, ‘mentioning’). I document higher disclosure credibility for retweeting than non-retweeting, as it establishes a closer association between the CEO and the message. In addition, mentioning increases the social presence of the parties involved, as users can observe the interactions between them and the disclosing firm in real time. Furthermore, I find that the higher social presence of an involved party (e.g. customers, suppliers, and managers) due to mentioning results in higher disclosure credibility. Finally, investors are more likely to sceptically scrutinise signals from an internal party, which makes CEO retweeting less effective than mentioning. The effect of retweeting is subdued when both tactics are used.

How far did the indigenous accounting of China's historically successful economy parallel Western double-entry bookkeeping (DEB)? We propose a scheme for classifying stages of bookkeeping that approach full DEB, review recently available nineteenth century Chinese accounting manuals and re-examine how far their recommendations reflect practice to be found in original account books contained in the archives of the Zigong brine wells for 1916-1917 (which have been argued to be essentially unchanged from the nineteenth century Qing era and perhaps earlier) and in the surviving accounts of the Fēngshèngtài salt traders of Henan province spanning 1854-1881. We introduce the accounting records we have now discovered from merchanting businesses in Anhui province, which span 300 years and survive from the 1590s onwards. These are all more sophisticated than the ‘merchant-banking' accounts in the vast archive of Tŏng Tài Shēng covering 1798-1850, and in the case of the Anhui merchants' accounts comprise ‘balance sheets' that include monetary values for physical as well as monetary assets, matching their owners' ‘capital'. We tentatively conclude, on the basis of the evidence now emerging, that despite its variety of forms indigenous Chinese style accounting practice may in some cases have captured the structural essentials of DEB’s content and functions and might be labelled ‘Chinese-style double-entry bookkeeping' ('CDEB'), over which Western bookkeeping had no conceptual advantages.

We explore the effects of social ties (including alumni relations, regional connections and employment affiliation) between the two signatory auditors (engagement and review auditors) on audit quality in China. We find that client firms with socially connected auditors have lower audit quality. The negative effect is more pronounced when the two signatory auditors are partners in their audit firms or when financial irregularities exist in their client firms. Conversely, this adverse effect is alleviated if the two auditors have attended elite schools or work for one of the Big 4 audit firms. We further find that social ties between the two auditors is negatively associated with firm value through impaired market confidence, while this negative relationship can be partially explained by impaired audit quality. Overall, our results indicate that the costs of the two signatory auditors’ social ties outweigh their benefits.

We examine the effect of financial reporting frequency on cost management decisions in crisis situations, with a focus on the COVID-19 outbreak. Using the European setting, we find that quarterly reporters exhibit greater cost elasticity relative to semi-annual reporters, meaning they had larger changes in cost for each change in sales. When allowing for cost asymmetry, we see that our results are driven by firms with decreases in sales and that quarterly reporters reduced their costs more. Additional analyses show that managerial learning and monitoring pressure might be potential channels behind the results and that there is a positive performance effect in the short run.

We examine earnings management by cash bidders with debt financing. We hypothesise and find that highly leveraged cash bidders seeking to fund bids with debt manage earnings in the pre-merger period to secure the funding with better terms. Leverage plays a key role in this setting because we expect more leveraged bidders to find it more difficult to obtain the necessary funds with good lending terms to carry-out the bid, which increases their incentives to manage earnings. We consider earnings management through classification shifting and accruals, and find that classification shifting is more prevalent when managers appear to be constrained in their ability to manage accruals. Additionally, we find evidence that greater earnings management is associated with lower interest rates, larger debt amounts, and fewer financial covenants. This suggests that pre-merger earnings management efforts by highly leveraged cash bidders appear to be successful in securing debt funds with better terms. Whereas prior research on earnings management by bidders focuses primarily on stock bidders, we extend this research to cash bidders; we highlight that highly leveraged debt-financed bidders also engage in opaque financial reporting decisions prior to the bid announcement.

This study examines how China’s stock market openness affects audit fees. In May 2018, Morgan Stanley Capital International (MSCI) announced the first wave of listing of large-cap China A-shares in the MSCI Emerging Markets (EM) Index, which marked China’s grand entrance into the global investment benchmark, and sharply expanded its stock market investor base. Using a difference-in-differences approach, we find that audit fees for constituent stocks decrease after the index inclusion. Further analyses suggest that foreign investors can reduce the risk of expropriation by controlling shareholders and mitigate agency conflicts. Our results also show that the effect is more pronounced for firms with weaker internal controls, lower levels of domestic institutional ownership, and those located in less developed markets. Our findings highlight the monitoring effect of stock market openness in improving corporate governance and advance our understanding of the key drivers of audit fees in emerging markets.

I study earnings management in a principal-agent model where the agent is overconfident in their ability to manage earnings, and the principal may induce the agent to communicate earnings truthfully. Without communication, overconfidence causes an increase in earnings management and incentive pay and may lead to a Pareto decrease in social welfare. Through communication, the principal can deter earnings management, and overconfidence increases the agent's total compensation at the expense of firm value. When the agent becomes significantly overconfident, communication loses value, and this causes a spike in earnings management.

The literature recognises that the activities of contemporary finance functions are expanding. Guided by the competing values framework, we group the results of previous research into four roles performed by modern finance functions – collaboration, adhocracy, control, and compete. We examine whether finance functions that encompass all four roles have an improved ability to match the right role with the corresponding organisational demand and then test whether this leads to improved financial performance. Empirically, we use structural equation modelling to analyse data from 408 firms operating in Denmark’s manufacturing and services sectors. The results show that fulfilling multiple finance roles is positively related to the ability to assist an organisation with the right activities at the right time and with the right quality. This ability to differentiate behaviour is also positively associated with a return on invested capital and, further, environmental uncertainty positively moderates this effect. The statistical results provide evidence that cultivating multiple roles within the finance function can create value and higher degrees of uncertainty positively leverage this value.