Purpose This 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/approach The 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. Findings This 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 implications The 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/value Unlike 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.

Purpose While 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/approach Using 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. Findings The 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/value To 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.

Purpose The 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/approach This 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. Findings The 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/value This 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.

Purpose Drawing 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/approach We 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. Findings The 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 implications Managers should prioritize developing a synergistic capability structure by integrating AIA deployment with robust ITC to strengthen CE strategies and improve SUP. Originality/value This 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 × ITC) that enables successful digital-to-sustainability transformation, providing a foundational perspective on how AI can be leveraged to achieve competitive sustainable advantage.

Purpose This 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/approach Data 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). Findings The 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/implications These 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/value This 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.

Purpose What 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/approach Based 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. Findings The 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/value The conclusions not only help to deepen SCAOS reform but also provide theoretical references for fostering the long-term competitive advantages of SOEs.

Purpose This study investigates the value relevance of integrated reporting in the North American equity markets. Design/methodology/approach Using a sample of firms in the US and Canada, we compare a treatment group that has adopted integrated reporting with a control group that has not to examine the value relevance of key accounting variables based on models derived from Ohlson’s (1995) residual income valuation framework. Findings We find that investors assign greater value to information presented in integrated reports than traditional, separate financial and nonfinancial disclosures. Furthermore, the value relevance of financial information is significantly higher for firms that have adopted integrated reporting than for those that have not. Practical implications Our evidence supports signaling theory, suggesting that compliance with the International Integrated Reporting Council’s initiative to consolidate diverse disclosures into one comprehensive report enhances the value relevance of information for investors. Social implications These findings have implications for policymakers, corporate managers and investors. As integrated reporting becomes a mainstream financial reporting practice, corporations are likely to become more conscious of the environmental and social impacts of their operations and increasingly incorporate sustainability considerations into their strategic decision-making. Originality/value This study is one of the first attempts to examine the value relevance of integrated reporting in the North American equity markets.

Purpose This 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/approach We employ least squares dummy variable (LSDV) and difference-in-difference (DiD) estimation with a regulation shock that forces firms to improve their disclosure quality. Findings High 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 implications The 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/value By 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.

Purpose With the increasing requirements for information disclosure in the capital market, earnings conferences have become an important way for investors to obtain information about the company's operating conditions and strategic direction. Design/methodology/approach Based on a digital perspective, our paper uses China A-share listed companies from 2010 to 2022 as a sample to examine how digital mergers and acquisitions (M&A) affects the use of digital-related terms in post-M&A earnings conferences and whether these terms are consistent with the company's actual digital innovation capabilities. Findings We find that management significantly increases digital-related disclosures after digital M&A; however, these disclosures are not aligned with actual improvements in innovation capabilities. This misalignment results from excessive and inefficient R&D investments following digital M&A. This is especially true when stock prices are overvalued, industry competition is weak, industry spillover effects are strong and analyst attention is low. The governance mechanisms we propose include strengthening external supervision and formulating a reasonable compensation system. Originality/value By analyzing the changes in communication strategies in earnings conferences, our paper reveals the strategic behavior of management after M&A. These results highlight the misalignment between digital-related disclosures and innovation outcomes and suggest that management may use symbolic language to meet investor expectations following digital M&A.

Purpose 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. Design/methodology/approach 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. 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. Originality/value 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.