Specific Firms Research Articles

The Effect of Audit Quality on The Financial Performance of Listed Deposit Money Banks in Nigeria

This study explored the influence of audit quality on the financial performance of listed deposit money banks in Nigeria. It successfully identified a significant and positive relationship between audit quality, represented by audit fees and audit firm specialization, and the performance of the sampled banks measured using ROA (Return on Assets) and EPS (Earnings per Share). The research collected annual data from 2009 to 2021, sourced from the annual reports and accounts of non-financial quoted companies in Nigeria. To address potential endogeneity issues, the study employed feasible generalized least square regression, aligning with the results of diagnostic tests. The analysis outcomes indicated that audit fees had a positive and statistically significant impact on the return on assets and earnings per share of the sampled banks. Similarly, audit specialization exhibited a positive and significant influence on both return on assets and earnings per share. Consequently, the study confirmed a noteworthy positive relationship between audit quality and the performance of Nigerian listed Deposit Money Banks. In light of these findings, the study recommends that regulatory authorities in the sector encourage banks to engage specialized audit firms.

The impact of digital finance development on vertical specialization: evidence from A-share listed companies in China

PurposeThis study intends to explore the relationship between digital finance and the vertical specialization of firms. The following questions are discussed: (1) As a representative new financial development model, what is the role of digital finance in the vertical specialization of firms? (2) If digital finance improves the level of vertical specialization of firms, what is the mechanism behind such improvement? (3) How does digital finance impact the vertical specialization of firms in different regions, industries, and firms?Design/methodology/approachA two-way fixed-effect model of panel data is proposed to verify the relationship between digital finance and the vertical specialization of firms. This model is constructed by matching the city-level data of digital finance with the data of China's A-share listed companies from 2011 to 2018. Meanwhile, the instrumental variable (IV) method and difference-in-difference (DID) method are adopted to deal with the endogeneity problem of the model.FindingsThe authors' study finds that digital finance has significantly improved the level of vertical specialization of firms. The result is robust under the endogeneity consideration and a series of robustness tests. After the dimensionality of the index is reduced, the depth of digital finance usage is more conducive to the improvement of the vertical specialization of firms compared with the width of digital finance coverage and the level of financial digitization. Digital finance mainly improves the level of vertical specialization of firms by reducing transaction costs and increasing the market thickness of the intermediate products. Moreover, digital finance has certain heterogeneity in promoting the vertical specialization of firms, an effect that is more significant in the eastern region, manufacturing industry and state-owned enterprises (SOEs).Research limitations/implicationsThe first limitation is the mechanism test. This research only analyzes the mechanism from transaction cost and the market thickness of the intermediate products. With the rapid development of information technology, digital finance will be further integrated into people's production and life. There will then be more mechanisms that should be explored between digital finance and the vertical specialization of firms. Another limitation is the data sample of this paper. The conclusions of this research are based only on the data of listed companies. However, in the authors' opinion, the specialization level of small and medium-sized enterprise (SMEs) should be higher. Therefore, the conclusions of this work are underestimated, which can be considered as the lower limit of digital finance for enterprise specialization.Social implicationsAs a favorable financing channel to supplement traditional financial service functions, digital finance plays a critical role in the operating efficiency of enterprises and the effective allocation of macro resources. The authors' research shows that digital finance has significantly improved the vertical specialization of firms. This conclusion provides guides to improve the production efficiency of enterprises and the quality of economic development.Originality/valueThis paper has three main contributions. (1) The relationship between financial development and the vertical specialization of firms is innovatively discussed from the perspective of digital finance, which implies that digital finance can effectively promote the level of vertical specialization of firms. (2) This paper provides new perspectives and ideas to reveal the impact mechanism of digital finance on the real economy by systematically analyzing the mechanism of digital finance on the vertical specialization of firms from the perspectives of transaction costs and financing constraints. (3) The regional differences in the development of digital finance, industry differences in the vertical specialization of firms and differences in the nature of enterprise property rights are all under consideration, which improves the effectiveness and pertinence of digital finance in promoting the vertical specialization of firms.

Product design in monopolistic competition

AbstractWe consider a model of monopolistic competition where producers can manipulate an elasticity parameter at an early stage. We interpret this as a choice of product specialization. Lower marginal costs of production lead to more generic products in all equilibria, which lead to fewer varieties under free‐entry. Entry of a new firm increases overall specialization and increases prices, that is, the environment exhibits price‐increasing competition. The loss of consumer surplus due to higher prices and lower consumption is compensated by the value of additional variety, hence entry also increases consumer surplus. Therefore, price‐increasing competition need not be anticompetitive under endogenous specialization.

Gene Therapy Hits Its Stride in the Clinic

Gene Therapy Hits Its Stride in the Clinic

Study on factors affecting audit fees and audit quality through auditors’ perceptions: Evidence from an emerging economy

Audit fees and audit quality have received the attention of stakeholders, clients, audit firms, and third parties. Each subject has its own opinion on determining influencing factors and their relationship. This study aims to investigate the determining factors of audit fees and audit quality in Vietnam. Using random data collection, a questionnaire was created on Google forms and sent to auditors from the 4th quarter of 2020 to the end of the 1st quarter of 2021. 267 valid auditors’ responses in 28 audit firms were used for data analysis. Exploratory factor analysis (EFA) was used to determine relationships between observed variables and factors. The measurement model and recommended hypotheses were confirmed by structural equation modeling (SEM) using SPSS 26 and AMOS 26. The study results show that contract types and audit complexity, audit firms’ reputation, size, and risk significantly impact audit fees and audit quality. In addition, the specialization of the audit firms does not have a positive effect on audit quality but on audit fees. The audit tenure has no statistical impact on audit fees and audit quality. Notably, audit fees statistically affected audit quality. Several implications can be applied, such as increasing the firm size, performing the procedures in response to audit risk, separating audit contract types, and determining the complexity of audit projects and specialties.

Audit Quality and Earnings Manipulations in Nigeria: Beneish Model

The significance to prepare reliable information discloses the need to fall back on an external auditor and a quality auditing process that can caution against the management of earnings. In line with the business practice, auditing does not provide sufficient coverage for some earnings management (EM) activities that result in financial statement fraud. Over the years, capital markets around the globe have witnessed numerous corporate financial scandals largely because of financial and accounting figures' manipulation. This has led to casting doubt on the quality of published financial reports and questioning the ability of the audit process. Against this background, this study examined the relationship between audit quality and real earnings management of listed manufacturing companies in Nigeria. Specifically, this study evaluated the effect of audit firm size, audit firm industry specialization, audit firm tenure, and audit firm independence on real earnings management. The study sampled 38 out of 55 listed manufacturing companies that cut-across different sectors from 2013 to 2020. From the multivariate analysis, the findings revealed a significant relationship between audit quality (audit firm size and audit firm independence) with a p-value of 0.014 and 0.003 respectively. It was concluded that firms audited by Big-4 firms with independence attract greater publicity and tighter scrutiny; hence, companies tend to desist from managing their earnings. The study, therefore, recommended that the management of manufacturing firms in Nigeria should persist in engaging experience audit firms with international affiliations, and they should work strictly with the CAMA, 2020 as amended by rotating audit firms after every three years as this will promote the reliability of financial statement prepared by management, and finally reduce manipulation of earnings.

Drugmakers embrace AI through deals with specialist firms

Drugmakers embrace AI through deals with specialist firms

Drugmakers embrace AI through deals with specialist firms

Drugmakers embrace AI through deals with specialist firms

Analysis of effects of Earnings Management on Corporate Social Responsibility Disclosures and role of Audit Quality on the IDX

This study aims to examine and analyze empirically the effect of earnings management on Corporate Social Responsibility disclosure and the role of audit quality as proxied by the size of the accounting firm and auditor industry specialization in moderating the relations between earnings management and CSR disclosure. This study uses secondary data with samples of 69 manufacturing companies in the basic industry and chemical sectors listed on the Indonesia Stock Exchange from 2017 to 2019 which were obtained using purposive sampling method. The independent variable in this study is earnings management with Discretionary Accruals as proxy which measured using Modified Jones Model. While the dependent variable in this study is the disclosure of Corporate Social Responsibility, which is proxied by CSR disclosure index (CSRI) measured based on indicators of GRI-G4 disclosure. The moderating variable in this study, there is audit quality as proxied by the size of the accounting firm and auditor industry specialization which is measured using dummy variables, the value of 1 is for The Big Four KAP and auditor industry specialization, while the value of 0 is for Non The Big Four KAP and unspecialized industry auditors. The analysis of data in this study is using a simple linear regression model and Moderated Regression Analysis (MRA) to decide the hypothesis. The value of 1 is for The Big Four KAP and auditor industry specialization, while the value of 0 is for Non The Big Four KAP and unspecialized industry auditors. The analysis of data in this study is using a simple linear regression model and Moderated Regression Analysis (MRA) to decide the hypothesis. The value of 1 is for The Big Four KAP and auditor industry specialization, while the value of 0 is for Non the Big Four KAP and unspecialized industry auditors. The analysis of data in this study is using a simple linear regression model and Moderated Regression Analysis (MRA) to decide the hypothesis. The results of this study reveal that earnings management has a positive and significant effect on Corporate Social Responsibility (CSR) disclosure and the size of the accounting firm (KAP) variable can be a moderating in the relations between earnings management and CSR disclosure. Meanwhile, the auditor industry specialist variable can't moderate the relations between earnings management and CSR disclosure.

DIGITALIZATION AND GLOBALIZATION IN TAXATION IN THE CONTEXT OF MODERN PRACTICE OF INTRODUCTION OF BLOCKCHAIN TECHNOLOGIES

One of the essential features of the new economy (neo-economy) is the increasing use of information and communication technologies, which led to the emergence and spread of the concept of "digitalization" as a process of digitalization, which is gradually formed within the post-industrial period of economic development. technical progress and innovative management methods, intellectualization of human capital, the use of advanced technologies, accelerated development of knowledge-intensive industries, giving priority to the production of knowledge and services, the mentality of creative, efficient, rational business. The vision of changes in taxation regarding the inclusion of blockchain technologies in the sphere of tax policy and introduction of taxation of tax differences of their exchange rate, as well as digitalization of cryptocurrency detection and taxation processes in Ukraine, which are currently outside the Tax Code of Ukraine. The world has changed significantly over the last decade. We live in an era of accelerating pace due to the rapid development of high technology. Traditional working tools used for years are losing relevance or disappearing altogether. Digital transformation, as a global trend, is steadily penetrating all industries. It affects both the most innovative and completely conservative areas. First of all, the client changes, both internal and external, his expectations, preferences and requirements. It forms a new demand, which must symmetrically correspond to supply. In the conditions of modification of the external environment there is an urgent need to reorient to modern methods of doing business. Only those companies that immediately translate their services into a more convenient and capacious mobile format of interaction with the client, will win the competition. Online retail and Internet banking, booking tickets and tours with aggregators or calling a taxi through mobile applications have become a reality of everyday life. According to Hampleton Partners, an international consulting firm specializing in technology mergers and acquisitions, the annual volume of transactions for the use of blockchain technology alone will be $6 billion. Many classic business models are giving way to technological innovation. The main message for businesses: "Upgrade or disappear", to which the modern tax system must also be adapted.

Division of labor in R&D? Firm size and specialization in corporate research

Corporate research and development constitutes one of the main sources of innovation. Recent research, however, discusses a decline in corporate research and its implications for technological progress. The contribution of this study is to model research & development (R&D) decisions in an R&D investment model that allows the analysis of firms’ engagement in research (R) as compared to development (D) activities. The model predicts higher investments in both activities for larger firms, but it also shows that research intensity, i.e. the R-share in R&D, declines with firm size. We test these propositions using data of R&D-active firms over the period from 2000 to 2015. While larger firms invest indeed more in both research and development, results from panel model estimations that account for unobserved heterogeneity across firms show that the relative focus on research decreases with firm size. In addition, the empirical results suggest that, since the returns to research in terms of productivity gains decline with firm size, specialization maximizes overall returns to R and D.

O-EGS05 The Prevalence of Bile Duct Stones in Patients Presenting with Acute Pancreatitis vs. Jaundice in a 5774 patient series. The Case for Single Session Surgical Management

Abstract Background There is increasing evidence that single session laparoscopic cholecystectomy with cholangiography and, when necessary and available, bile duct exploration offers optimal clinical outcomes and superior cost benefits to patients with suspected bile duct stones. There is a perception that preoperative endoscopic clearance of bile duct stones is necessary in patients presenting with pancreatitis and jaundice. However, most patients do not have severe disease and are fit for index admission surgical management. We aim to study the prevalence of bile duct stones in pancreatitis vs. jaundice and evaluate this management approach with regards to preoperative and operative parameters and postoperative outcomes. Methods Analysis of prospectively maintained database of 5774 consecutive laparoscopic cholecystectomies, cholangiography(IOC) with or without bile duct exploration was undertaken. Patients with suspected bile duct stones are referred to one firm with an intention of single surgical treatment in the index admission. Data of patients presenting with acute pancreatitis and obstructive jaundice was extracted. In the absence of suspected malignancy there was a limited role for preoperative MRCP and ERCP. The incidence of confirmed CBD stones requiring exploration, type of exploration, morbidity, re-operations and readmissions, hospital stay, number of episodes, and presentation to resolution intervals were compared in the two groups. Results Conclusions Single session surgical treatment of patients with acute pancreatitis and jaundice by specialist firms in the index admission (89% and 86% if previous admissions by other units is excluded) offers many advantages. MRCP and ERCP utilisation is minimised in favour of IOC; two thirds of pancreatitis patients and one third of jaundiced patients have no CBD stones. Simple transcystic explorations deals with most stones in both groups. The morbidity, open conversion, readmissions, retained stones and re-operations are low. Total hospital stay, number of treatment episodes and presentation to resolution are optimised and should persuade surgeons to avoid subjecting patients to multiple treatments.

The Value of Auditor Industry Specialization: Evidence from a Structural Model

ABSTRACT This study investigates the value of auditor industry specialization. In the first step, we use a discrete choice model to derive the first-order demand for auditor industry specialization. Our results reveal that clients have a general preference for auditor industry specialization, relating to both audit firm and audit office specialization. We observe that specializations at the audit firm and audit office level are substitutes. We also find that larger, more complex clients have a stronger demand for industry specialization at the audit office level. In the second step, we use the results from the discrete choice model to quantify the value of auditor industry specialists for clients. We find the overall value of industry specialization aggregated across all clients is 5.2 million USD (0.36 percent of audit fees) and that industry specialization at the firm (office) level is decisive for auditor choice in 4 percent (6 percent) of all cases. JEL Classifications: M42; M48; L11; L84.

Determinants of financial statements integrity

This research aims to find out the influence of corporate governance measured by institutional ownership, managerial ownership, audit committee, and independent commissioner, as well as the influence of accounting firm specialization and audit tenure on the integrity of financial statements. The population of this research was the service companies in the infrastructure, utilities, and transportation sectors listed at IDX during the period 2015-2018. The sampling was done using purposive sampling method which collected 21 companies. The data analysis method used was multiple linear regression. The research findings reveal that institutional ownership, managerial ownership, independent commissioner, and accounting firm specialization have positive influences on the integrity of financial statements, while audit committee and audit tenure do not have significant influences on the integrity of financial statements.

The Determinants of Audit Quality: A Study Using the Approach of Earnings Surprise Benchmark

This study aims to find empirical evidence regarding the influence of audit tenure, audit firm rotation, audit firm industry specialization, and time budget pressure on audit quality. This research is a quantitative research using secondary data in the form of financial statements. This study uses a population of manufacturing companies in the consumer goods sector listed on the Indonesia Stock Exchange in 2015-2017. The sampling was done by using a non-probability method with a purposive sampling technique. The number of samples used in this study is 34 companies. The data analysis method used is a logistic regression analysis method using Statistical Package for Social Sciences (SPSS) version 21. The results of this study indicate that audit tenure and audit firm rotation have no effect on audit quality, PAF industry specialization has a positive effect on audit quality, time budget pressure has a negative effect on audit quality.

Sample stewardship call script for board members

Experts at The Osborne Group, a New York City consulting firm specializing in nonprofits, offers its clients the following sample script for board members conducting follow‐up calls with donors.

Impression Management in Public Sector Audit Proposals: Language and Fees

We adapt impression management theory to investigate: (1) whether governmental audit proposals include the values of ‘professionalism’ (i.e. independence and competence) and ‘commercialism’ (i.e. client cooperation, auditor trustworthiness, client satisfaction, commercial interests), and, (2) the relations of audit proposal language and contextual influences on proposed audit fees and proposal success. The results suggest that proposals accord with audit firms’ market strategies. Compared to other firms, proposals from small, non-specialist firms use more commercial language, while proposals from governmental specialist firms use more competence language. The results also suggest that the market for US public sector audits includes many low cost, low quality firms; specifically, the modal proposal (41.2%) includes high use of commercialism language and low proposed audit fees. We also find that audit firms propose higher audit fees in US states with a weak governmental internal auditing office, and, that greater use of commercial language correlates with higher rates of proposal success, but only in US states with weak governmental internal auditing functions. The finding of inter-relations between proposal language, the strength of governmental internal audit functions, and proposed fees suggests the value of considering multiple influences on the quality of the public sector financial controls. Acronyms : American Institute of Certified Public Accountants (AICPA) ; Certified Public Accountant (CPA) ; Corporate social responsibility (CSR) ; European Court of Auditors (ECA) ; European Union (EU) ; fixed effects (FE) ; General Accountability Office (GAO) ; Governmental Financial Officers Association (GFOA) ; Independent Regulatory Board for Auditors (IRBA) ; Institute of Internal Auditors (IIA) ; International Accounting Education Standards Board (IAESB) ; International Federation of Accountants (IFAC) ; International Organization of Supreme Audit Institutions (INTOSAI) ; National Association of State Auditors ; Comptrollers and Treasurers (NASACT) ; not-for-profit (NFP) entities ; natural language processing (NLP) ; Office of Management and Budget (OMB) ; Request for proposal (RFP) ; Two-stage least squares (2SLS) ; United Kingdom (UK) ; United States (US)

The Affecting Factors of Audit Quality with Earnings Surprise Benchmark Approach as a Measure of Audit Quality

This research examines whether abnormal audit fee, client importance, public accounting firm industry (PAF) specialization, public accounting firm (PAF) reputation, audit delay may affect the audit quality of manufacturing companies. This research used a quantitative method as a basis for assessing audit quality using the earnings surprise benchmark method, which emphasizes the profits generated by the company. This research used 350 data panel samples from manufacturing companies that have been listed on the Indonesia Stock Exchange (IDX) throughout 2013-2019. Sampling using non-probability with purposive sampling technique, and to analyze the data, the researcher used logistic regression because the dependent variable in this research only consisted of two values. This research shows that abnormal audit fees affect negatively significant to audit quality, while client importance and public accounting firm industry specialization affects positively significant to the audit. However, public accounting firm reputation does not have a positive effect on audit quality, and audit delay does not negatively affect significantly on audit quality. This research is the first time to examine abnormal audit fees on audit quality using earning surprise benchmark calculation method. Results from this research are expected to be beneficial for policy determination and audit standard development by related regulations and research development on audit quality.

How do VAT reforms in the service sectors impact TFP in the manufacturing sector: Firm-level evidence from China

This paper estimates the impact of a pilot policy reform in China that replaced the business tax (BT) with a value-added tax (VAT) for the service sectors on the total factor productivity (TFP) of manufacturing firms. Employing a difference-in-differences (DD) estimation approach, our results show that through forward and backward linkages (FLs and BLs, respectively) along the value chain, this pilot program has a positive effect on manufacturing firms’ TFP. A 1% increase in FLs (BLs) leads to an approximately 7% (16%) increase in firm productivity. This effect is larger for non-state-owned enterprises and labor-intensive firms than for other firms. Manufacturing firms with high intensities of exporting activities are affected only through BLs. Further exploration shows that this increase in productivity is realized mainly through increased specialization of firms. Our findings imply that simplification and unification of the tax system across sectors can help boost firm productivity.

CLUSTERS AS A SUBJECT OF MODERN ECONOMY

The article is devoted to the analysis of clusters as a new factor of increasing competitiveness in the modern economy. The initial preconditions for the formation of clusters are described (the presence of competitive enterprises, presence of competitive advantages for cluster development in region, geographical concentration, an extensive selection of participants, existence of links and interactions between cluster entities). The characteristic features of clusters are given (the possibility of research and development; qualification of the workforce; improvement of labor potential, collective vision and leadership; proximity of suppliers and connections with them; availability of capital; access to specialized services; associated structures; intensity of network formation; entrepreneurial energy; innovation and training). The general features of cluster formations are characterized (presence of critical mass; specialization of firms on various aspects of the value chain; mainly horizontal structure of relations and regulation) The classification of clusters is given (by territorial coverage, by stage of cluster development, by degree of products novelty, by role in the system of exchange and use of knowledge, by presence and degree of development of elements in cluster structure, by level of aggregation of cluster participants, by nature of the industry of enterprises participating in the cluster). The models of cluster formation (Italian, Japanese, Finnish, North American, Indian-Chinese, etc.) are highlighted.