Financial Reporting Quality Research Articles

Relative Liability Exposure for Negligence and Financial Reporting Quality: Evidence from the Audit Interference Rule

ABSTRACT We examine how the shifting of legal liability between auditors and clients affects financial reporting quality. We exploit the state-level adoption and rejection of a common law doctrine, the Audit Interference Rule (AIR), which shifts legal liability between auditors and clients, while not affecting total legal liability. The likelihood of restatements declines following staggered rejections of the AIR that shift risk to clients. Path analysis indicates that audit fees increase following AIR rejections, suggesting that relatively greater liability exposure for clients leads to a greater demand for assurance services that, in turn, reduces the likelihood of restatements. We further find greater improvements in financial reporting quality following the rejections of the AIR among clients with higher litigation risk and larger clients. Broadly, we provide novel evidence that clients’ incentives relating to increased liability exposure appear to dominate auditors’ disincentives relating to decreased liability exposure on financial reporting quality. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: K15; M41; M42.

Financial Reporting Quality on Dividend Payout Policy During Pandemic COVID-19

Financial Reporting Quality on Dividend Payout Policy During Pandemic COVID-19

Information Technology Capability, Managerial Ability, and Financial Reporting Quality: A Research Note

ABSTRACT The role of a firm’s information technology (IT) capability and managerial ability on financial reporting quality has been documented in prior literature. However, scant empirical work exists on the moderating effect of managerial ability on a firm’s IT capability and its impact on financial reporting quality. Drawing on the resource-based view of the firm and a sample of firms from 2000 to 2013, we predict and find that InformationWeek 500 (IW500) firms with high-ability managers are associated with better financial reporting quality than non-IW500 firms. Specifically, we find that IW500 firms have better financial reporting quality and are less likely to restate their financial statements in subsequent periods and the interaction of IT capability and managerial ability improves financial reporting quality. Our findings document the importance of IT and the moderating effect of managerial ability on IT in influencing financial reporting quality. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M40.

Enhancing financial transparency: The impact of siskeudes application in Kediri Regency

The Village Law (Law Number 6 of 2014) mandates local governments to manage village affairs and funds, leading to the establishment of the Village Fund. This study examines how implementing the Village Financial System (SISKEUDES) application affects transparency and, consequently, the quality of financial reports in Kediri Regency. Using quantitative research with 185 samples from 343 villages, the study finds that SISKEUDES directly improves financial report quality and indirectly through transparency mediation.

The Influence of SKPD Performance Characteristics, Education Level, Human Resource Competence and Technology Ultilization on the Quality of Regional Financial Reports of the Simeulue District Government

Budget, and can be used as a pratical guide fro every policy maker in managing the budget. The purpose of this study was to determine the effect of SKPD performance, education level, human resource competence and information tecnology utilization on the quality of financial report. The population in this study were all regional devices totaling 45 (forty-five) SKPD (Reginal Work Units) in Simeulue Regency with a total of 180 (one hundred and eighty) respndents used in this study using a sample of Budget Users (PA), Commitment Making Officers (PPK), Technical Implementation Officers of Activities (PPTK), and Expenditure Treasurers as Research Smaples. Data analysis in this study used multiple linear regression which was prosessed with the SPSS program. The results showed that the influence of SKPD performance, education level, human resource competence and utilization of information technology had a positive and significant effect on the quality of regional financial reports. Human Resource Competencies Positively Affect the Quality of Regional Apparatus Financial Reports, Utilization of Information Technology Positively Affects the Quality of Regional Apparatus Financial Reports in Simeulue Regency. The implications of the results of this study are expected to be an evaluation material for policy makers in improving the Quality of Regional Financial Reports, and can be used as practical guidelines for every policy maker in financial reports.

KUALITAS LAPORAN KEUANGAN DESA: SEBUAH STUDI DI KABUPATEN BOYOLALI

Purpose: This study examines how financial management and asset management affect the quality of village financial reports in Boyolali Regency, Central Java. Methodology/approach: In order to gather research data, surveys and questionnaires were employed as the primary method and instruments in this quantitatively oriented study. This study also employed the FGD method to generate the question items/indicators included in the questionnaire. 252 village administrations from the Boyolali Regency participated in this study as respondents. Moreover, survey data was analyzed using multiple regression analysis. Findings: The quality of village financial reports has been demonstrated to be positively impacted by both asset and financial management. Practical implications: The findings of this study can serve as a valuable foundation and point of reference for regional administrations and associated parties, particularly for village administrations across Indonesia, so they can create high-quality village financial reports. Originality/value: The research model used in this study is still relatively rare in Indonesia. This study has simultaneously analyzed the influence of financial management and asset management factors in order to improve the quality of village financial reporting.

The Influence Of Accounting Understanding, Education Level, And Business Size on The Quality of Financial Reports of UMKM In Surakarta City

The Influence Of Accounting Understanding, Education Level, And Business Size on The Quality of Financial Reports of UMKM In Surakarta City

Is Customers’ Financial Reporting Quality Associated with Suppliers’ Decision to Contract?

ABSTRACT Using a unique hand-collected dataset of purchase obligations, we find that customers’ financial reporting quality is positively associated with future supply contracts, indicating that suppliers are more willing to contract with customers who provide them with better information. Further, the association between customers’ financial reporting quality and future supply contracts is stronger for customers with strong bargaining power, which is consistent with suppliers relying more on financial reports when they have less access to customers’ private information. Collectively, our results suggest that customers’ financial reporting quality plays an important role in influencing suppliers’ decisions to contract with customers for the future supply of goods and services. Data Availability: Data for dependent variable are manually collected and data for all other variables are available from public sources cited in the text. JEL Classifications: D80; M41.

Nexus of Corporate Governance, Financial Reporting Quality and Investment Efficiency

This paper examines the relationship between corporate governance, financial reporting quality, and investment efficiency using data from 207 non-financial firms listed on the Pakistan Stock Exchange (PSX) for a period of 9 years from 2008 to 2016. Since the Pakistan Corporate Governance Code was revised in 2012, therefore consistent with previous studies, the effect of the promulgation of the new corporate governance code on financial reporting quality is also analyzed. Thus, using the GMM model, the results of the study show that the Corporate Governance Code 2012 improves the quality of financial reporting. Owners of family firms confiscate the wealth of minority shareholders by deteriorating the quality of financial reports. Independent directors of the board and independent directors of the audit committee effectively monitor the financial reporting process. Family ownership, board independence and audit committee independence interact with the code in affecting financial reporting quality and substitute or complement each other. Inefficient investments decrease financial reporting quality. Furthermore, the new governance code has an incremental effect on the relationship between investment inefficiency and financial reporting quality.

Application of artificial intelligence Sensors based on random forest algorithm in financial recognition models

Due to the important role of financial information disclosed by enterprises in investor decision-making and economic policy formulation, the corporate market has set the latest standards and requirements for the quality of financial reports. In the current situation, financial recognition work is mainly completed manually, which is inefficient and prone to errors, and is not suitable for large-scale applications. Therefore, we conduct in-depth research on financial recognition models. Firstly, we analyzed the random forest algorithm and used the SMOTE algorithm to expand the sample data. We successfully constructed an optimized random forest algorithm model, which can better improve accuracy and reduce misjudgment rates. Secondly, combined with the current financial data analysis of artificial intelligence technology, the steps for data management and data extraction were designed. Finally, while establishing a financial recognition model, a channel for obtaining internet information and a program for processing this information were also established. After experimental verification, the random forest model has shown better fitting performance in the field of financial fraud identification, providing more reliable support for applications in this field. Therefore, the financial recognition model constructed using artificial intelligence technology based on random forest algorithm has significant value in both theoretical and practical aspects, effectively reducing corporate financial risks.

PENGARUH PENERAPAN STANDAR AKUNTANSI PEMERINTAHAN, IMPLEMENTASI SISTEM INFORMASI MANAJEMEN DAERAH, DAN KOMPETENSI SUMBER DAYA MANUSIA TERHADAP KUALITAS LAPORAN KEUANGAN PEMERINTAH DAERAH (STUDI KASUS DI KOTA MADIUN)

Abstract- This research aims to examine the effect of implementing government accounting standards, implementing regional management information systems and human resource competence on the quality of regional government financial reports. This type of research is quantitative. The data collection technique in this research uses questionnaires directly to respondents. The respondents in this study were employees of the Madiun City Regional Revenue Agency. Data analysis was carried out using multiple linear regression analysis with the SPSS (Statistical Product and Service Solution) version 25 for Windows program. The results of the hypothesis research show that the Implementation of Government Accounting Standards variable is 0.022, the Regional Management Information System Implementation variable is 0.004, the Human Resources Competency variable is 0.031 and the Adjusted R Square shows a value of 0.626 or 62.6%. The results of this research show that the implementation of government accounting standards has a positive influence on the quality of regional government financial reports, the implementation of regional management information systems has a positive influence on the quality of regional government financial reports, and human resource competence has a positive influence on the quality of regional government financial reports.

Analisis Perlakuan Akuntansi Terhadap Aktiva Tetap Pada PT. Agung Podomoro Land Tbk

Along with the times, the need for information and the quality of financial reports is increasing. Financial statements provide an overview of the company's financial condition that is important for shareholders and other stakeholders. The company aims to improve shareholder welfare through optimal profit generation. One important component in the financial statements is fixed assets, which has a big role in business operations, especially in the property sector such as PT Agung Podomoro Land Tbk. This study aims to analyze the accounting treatment of fixed assets at PT Agung Podomoro Land Tbk. The method used is descriptive analysis of secondary data from the company's financial statements. The results showed that PT Agung Podomoro Land Tbk applies the straight-line method for depreciation of fixed assets with the appropriate useful life. The company also follows PSAK No. 16 on the termination and disposal of fixed assets. Information regarding the value of fixed assets presented in the financial statements has been clearly disclosed, including additions, subtractions, and reclassifications of assets. The implication of this study shows the importance of proper fixed asset management to ensure the accuracy of financial statements and effective decision making.

How CSR Performance and Financial Report Quality Affect Corporate Share Prices? Case of Indonesia

Purpose: This research intends to investigate the impact of financial report quality and CSR performance on the firm share prices. Methodology/approach: The 78 firms-years observation of LQ-45 public listed companies in Indonesia from 2019 to 2020 is used in this study. The financial report quality is measured by the accrual-based model of earning management, while CSR performance is measured by the amount of CSR spending. The OLS regression is applied to test the hypotheses. Findings: The findings show that there is no effect of financial report quality on the share prices. On the other hand, CSR performance plays an important role in influencing a company’s share prices. CSR performance has a positive effect on share prices. The financial report failed to ensure that there is no existing information asymmetry within the organization. While CSR performance is a form of social-engaged activities in order to achieve social benefits and legitimation. Practical implications: In the context of legitimacy and agency theory, these findings provide fruitful insight into how the firm performance is valued by investors, which is not only based on financial performance but also based on non-financial performance. Originality/value: By providing a new measurement of CSR performance, this study is different to most existing CSR kinds of literature.

The Role of the Sharia Supervisory Board in Mediating Disclosure of Islamic Social Reporting and the Quality of Financial Reports on the Reputation of Sharia Banking in Indonesia

The Role of the Sharia Supervisory Board in Mediating Disclosure of Islamic Social Reporting and the Quality of Financial Reports on the Reputation of Sharia Banking in Indonesia

THE INFLUENCE OF ACCOUNTING STANDARDS, TECHNOLOGY AND LOCAL APPARATUS ON THE FINANCIAL REPORTING OF BPKAD IN BANDUNG CITY

The purpose of this study is to determine the influence of the application of government accounting standards, the utilization of technology and the quality of local government apparatus on the quality reports of the Bandung City BPKAD Financial Reporting (BPKAD). This study combines several variables, namely, the variables of application standard accountancy governance (X1), utilization technology (X2), and quality apparatus government area (X3) against quality report finance (Y). The researchers took samples using purposive sampling technique. The results showed that the implementation of the government accounting standard has a significant positive effect on the Quality of financial reports. The use of technology has an important positive effect. The quality of the local Government Apparatus government area has an obvious positive effect, and the use of information technology can assist government entities in compiling and producing quality financial reports effectively, efficiently, and economically. It is important to pay more attention to the competency of the human resources of government employees. For the local government of Bandung city, it is advised to further improve the quality, relevance, and understandability of the financial statements produced so that financial reports can be presented in a timely manner. The SKPD level needs to be considered, as they greatly assist employees in performing their duties effectively.

Evaluation of Earnings Management in Relation to the Quality of Financial Reporting: A Comparative Analysis of the Agriculture and Manufacturing Sectors

Evaluation of Earnings Management in Relation to the Quality of Financial Reporting: A Comparative Analysis of the Agriculture and Manufacturing Sectors

Earnings quality of multinational corporations: Evidence from Latin America before and after IFRS implementation

AbstractThis study evaluates whether Latin American multinational corporations (MNCs) report higher quality of accounting reports than companies with only operations in their home countries. In addition, it explores whether the impact of internationalization on the quality of accounting information has changed since the implementation of the International Financial Reporting Standards (IFRS) in the region. An emerging area of research studies the effect of firms’ internationalization on accounting and finance. Nevertheless, evidence of the impact of internationalization on the quality of earnings quality is scarce. Based on a sample of public organizations listed on the main stock exchanges of Brazil, Mexico, Peru, and Chile from 2000 to 2020, this study finds that companies with international operations present higher‐quality accounting reports than firms with only local operations. The impact of IFRS implementation on the quality of financial reports is significant only for companies with operations in their home countries. Latin American MNCs show a decline in the quality of accounting reports after adopting IFRS.

The Impact of External Audit on the Quality of Financial Reports in Jordanian Insurance Companies

This study aimed to the impact of an external audit on the quality of financial reports with its dimensions (relevance, credibility) in Jordanian insurance companies, The study population consisted of the auditors, whose number is (440), and distributed (209) questionnaires, returned of them (185) questionnaires, and the valid questionnaires for analysis were (169) questionnaires representing a responses rate of (71.9%) of the study sample. Some appropriate statistical methods were used and the statistical program (""SPSS"") was used. The results showed that there is a high level of external audit, and the level of the quality of financial reports was medium. The statistical analysis indicated a statistically significant effect at the significance level (0.05 ≥α) for external audit on the relevance of financial reports of Jordanian insurance companies. This result may be because the audit offices contracted by Jordanian insurance companies seek to examine and evaluate the data, reports, financial statements, administrative activities and processes in these companies objectively, and impartially, to obta. The study recommended that external auditors should continuously participate in training programs and workshops to inform them of all that is new in the audit profession, especially about the insurance sector.

Do CFO Outside Directorships Benefit or Harm Home Firm Financial Reporting Quality?

SYNOPSIS Demand for chief financial officer (CFO) service on corporate boards has grown substantially in recent years, leading to questions about how outside board appointments affect a CFO’s ability to fulfill their home firm responsibilities. In this paper, we focus on the CFO’s core responsibility of overseeing home firm financial reporting quality, and we explore the types of situations where outside board service may lead to either learning opportunities or pressure to shirk on home firm duties. Our results should interest investors, auditors, and board members considering the implications of CFO outside board service because, although we observe no negative impacts on home firm financial reporting quality arising from outside board service, we find only limited situations where significant benefits accrue. Data Availability: All data are publicly available from sources cited in text. JEL Classifications: G34; M40; M41.

Electronic Auditing and Its Impact on Achieving Quality Financial Reports An Exploratory Study at Al-Tafif Islamic Bank, Babylon Branch

This research aims to determine the effectiveness of electronic auditing in improving the quality of financial reports. To achieve the objectives of the study, a cross-sectional survey method was used to collect data from a sample of employees working at Al-Taif Islamic Bank (Babylon Branch), and primary data was collected using structured electronic Likert-scale questionnaires. SPSS statistical software was used to analyze the collected data; The results of the analysis concluded that electronic auditing improves the quality of financial reports in Iraq. The study concluded that banks should adopt the effective and expanded use of electronic auditing because it provides independent, honest and reliable financial audit information. Banks in Iraq must adopt effective and expanded use of electronic auditing to ensure the detection of financial fraud, thus closing routine financial loopholes.