Quality Of Financial Information Research Articles

Information environment and participation of foreign banks in U.S. syndicated loan market

This study examines how financial information quality affects the participation and lending behavior of foreign banks in the loan syndicate of U.S borrowers. We utilize the implementation of the Sarbanes-Oxley Act (SOX) in the U.S. as our research setting. We demonstrate a significant increase in foreign banks loan shares to public firms in the post-SOX period. In parallel, we find that this increase in lending by foreign banks is accompanied by more favorable price and non-price contract terms. By contrast, we find no evidence of either more loans or more favorable loan contract terms offered to U.S. privately held borrowers by foreign banks. Further analysis shows that the impact of such an exogenous change on loan contract terms are more pronounced among public listed borrowers with higher ex ante information asymmetry. Overall, our findings imply that the increase in quality and reliability of corporate financial information brought about by SOX reduces the information disadvantage of foreign lenders.

The Influence of Sustainability Reporting on Audit Quality. Empirical Analysis on Companies Listed on the Bucharest Stock Exchange

The entire range of financial and non-financial activities carried out in companies has an impact on the quality of disclosures. The audit, through its specific procedural approach, contributes to enhancing the quality of reporting by balancing the interests of the two parties involved in the reporting process, i.e. the companies and the users of the information. The paper aims to assess the extent to which sustainability reporting influences audit quality, assessed from a dual perspective, namely that of the audited company (through the quality of the information published and insured by the audit) and that of the auditor (through the audit opinion expressed). Using information specific to companies listed on the main market of the Bucharest Stock Exchange, the study analyzes the link between a series of dummy variables associated with carrying out sustainable activities, social and environmental protection and the size of discretionary accruals, i.e. the audit opinion. The results reveal a negative relationship between the two dimensions analyzed. The involvement of companies in sustainable actions is generally interpreted as an effort that diminishes audit quality, measured from both perspectives. The effect of these social and environmental protection activities is correlated with potential manipulation of the results (decreasing the quality of financial information) and with increasing the likelihood of expressing a modified audit opinion, respectively. The results are also robust following the introduction of control variables into the analysis, such as: leverage, company growth, company size or industry.

Features of the Association between Debt and Earnings Quality for Small and Medium-Sized Entities

The main source of financing is bank loans for Portuguese small and medium-sized entities (SMEs), which implies several constraints to obtaining additional funds. Relying on the argument of Positive Accounting Theory (PAT) that accounting choices are not neutral and on Agency Theory that information asymmetry prevails between insiders and outsiders, we analyzed the impacts of debt on earnings quality, focusing on its level, its increases, and its term of payment. We estimated econometric regressions using panel data with fixed effects over 2013–2019, using discretionary accruals as an inverse proxy of earnings quality. We found empirical evidence that the relationship between debt and earnings quality tends to vary in sign, as the quality of financial information deteriorates with debt, but as debt becomes high, firms tend to increase the quality of earnings. Furthermore, we found that short-term debt tends to decrease earnings quality more than long-term debt. This article aimed to contribute to the prior literature by collecting evidence that debt levels tend to be an incentive to increase earnings management and fill the gap by analyzing the influence of different debt features. This evidence is useful because earnings management may compromise both stakeholders’ confidence and the efficient allocation of capital.

Peran Kompetensi Staf Akuntansi Dalam Pencapaian Kualitas Informasi Keuangan Daerah Pada Sekolah Tinggi Ilmu Tarbiyah (STIT) Batu Bara

This research aims to understand the level of competency of accounting staff at the Tarbiyah College of Science (STIT) Batu Bara, the quality of regional financial information, the role of accounting staff competency at the Tarbiyah College of Science (STIT) Batu Bara, and its impact on the competency of accounting staff. The research method used is Census with a qualitative and quantitative approach. The analysis tool used is simple regression. The research results show that the important role of accounting staff competencies such as a thorough understanding of financial accounting standards, proficiency in financial analysis, and technical proficiency in accounting information systems in maintaining the quality of regional financial data. This shows that there is a need to increase investment in developing the skills of accounting staff through training and continuous education to support the efficiency and effectiveness of financial management in the educational environment. It can be believed that this research can expand knowledge about the relationship between the quality of regional financial information and the ability of accounting staff, especially at the Tarbiyah College of Science (STIT) Batu Bara.

Measuring cloud information systems’ effect on financial information quality using the information system success model: Evidence from Saudi Arabia

This paper explores the effects of cloud information systems on the quality of financial reporting within Saudi Arabian enterprises, utilizing the DeLone and McLean Information Systems Success Model as its theoretical foundation. The central inquiry of this research assesses the influence of cloud information systems on the quality of financial data. It hypothesizes a beneficial correlation between these elements. The study involved 203 auditors from Saudi accounting firms, and the findings underscored a significant positive influence of the model's six dimensions on financial information quality. The utilization of cloud information systems appears to bolster financial reporting quality in organizations. This research enriches existing literature by empirically validating the positive effects of cloud information systems on financial data quality in Saudi contexts. Additionally, it underscores the practical utility of the IS Success Model in evaluating the efficacy of cloud information systems in enhancing financial information quality. These insights are particularly valuable for managers and policymakers contemplating the adoption of cloud-based systems to augment their financial reporting processes.

The Eco-Friendly Side of Analyst Coverage: The Case of Green Innovation

Green innovation is a key solution to resource depletion and natural environment deterioration. It is advancing the march toward marrying business with sustainability worldwide. Embodying green elements in core innovative activities naturally becomes the critical information for the external assessments of organizations. To identify this information channel effect, the current study is intended for shedding light on the effects of financial analysts, a prominent and professional stakeholder group, on corporate green innovation. Combining the comprehensive incoPat database with the data of Chinese publicly listed manufacturing firms over the period from 2003 to 2017, the empirical results show that analyst coverage could significantly improve firms’ green innovation performance. It is also observed both institutional ownership and stock liquidity significantly enhance the positive relationship between analyst coverage and corporate green innovation. The information-based mechanisms are further identified by the split sample analysis based on the quality of financial information, when either the choice of audit company or the disclosure quality rank is applied. These findings provide beneficial supports for the idea that leaning on the monitoring from the financial analysts, managers could be encouraged to promote green investment with its long-time horizon and correct the myopia that overly focuses on short-term performance.

Property, Plant and Equipment Measurement and Financial Reporting Quality of Manufacturing Firms in Nigeria

The quality of financial information in Nigeria regarding property, plant and equipment, particularly in the manufacturing sector, remains a significant concern. In view of this, this present study examined the relationship between property, plant and equipment measurement and financial reporting quality of manufacturing firms in Nigeria. The specific objectives were to ascertain the effect of PPE measurement using cost model on faithful representation of financial information of manufacturing firms in Nigeria and to assess the effect of PPE measurement using revaluation model on faithful representation of financial information of manufacturing firms in Nigeria. This study adopted a survey research design with data collected through the administration of a five-point Likert Scale questionnaire to a sample of 360accounting staff across selected manufacturing firms in Nigeria. The data collected were analyzed using descriptive statistics tools and Pearson product moment correlation analysis via SPSS 25.0 statistical package. The study findings revealed that PPE measurement using cost model has an insignificant positive relationship (r= 0.039{p=0.468>0.05}) with faithful representation of financial information of manufacturing firms in Nigeria while PPE measurement using revaluation model has a significant positive relationship (r= 0.733{p=0.000<0.05}) with faithful representation of financial information of manufacturing firms in Nigeria. It was thus concluded that the use of the revaluation model for PPE measurement leads to more accurate and reliable financial information, which enhances the credibility of financial statements and increase stakeholder trust. The study recommended, amongst others, that regulatory bodies in Nigeria should consider mandating the use of the revaluation model for PPE measurement in financial reporting to enhance the credibility of financial information at all times.

Effectiveness of International Financial Reporting Standard Enforcement in Nigeria

Background to the Study The general belief in accounting literature is that the adoption and application of IFRS in developing countries will enhance the quality of financial statement information including its reliability and comparability (Ballas, Skoutela and Tzovas, 2010). However, it is also argued that no matter how high the quality of the accounting standards adopted, comparable and high-quality accounting information will not be achieved without strict enforcement of these standards (White house, 2012). IFRS is “a set of accounting rules, principles and procedures that aim to create a common financial reporting platform with the objective of bringing transparency, accountability, efficiency to financial markets, harmonization of accounting practices and enforcement. Even though some countries claimed they have officially adopted IFRS and mandated companies to prepare financial statements accordingly, some companies may selectively implement IFRS recognition and disclosure requirements. Even with increasing IFRS adoption around the world, notable differences in financial reporting systems will remain due to regulatory, political, and institutional differences across countries, leading to variation in IFRS compliance between different jurisdictions (Soder storm and Sun, 2007). Such variation hinders the main goal of developing a global set of accounting standards which is comparability of accounting information across countries. Chen and Zhang (2010) provided empirical corroboration from the Chinese market that mere adoption of IFRS does not necessarily lead to the perceived high-quality and comparable financial accounting information because of enforcement challenges and lack of full compliance.

IMPACT OF THE QUALITY OF FINANCIAL REPORTING INFORMATION ON THE SECURITIES LIQUIDITY OF LISTED COMPANIES ON THE STOCK MARKET IN VIETNAM

Research on the relationship between financial statement information quality and securities liquidity, making recommendations to improve the liquidity of listed companies. The purpose of this paper is to assess the impact of quality of financial reporting on the liquidity of securities of companies on the stock market in Vietnam. Using a mixed method to measure Financial statement information quality, securities liquidity. Using a regression model to evaluate the influence of financial statement information quality on securities liquidity of 149 companies listed on HOSE and HNS in 2022. The information quality characteristics of the financial statements are: Appropriate, Honest, Understandable, Comparative, Timely, Verifiable. To measure the liquidity of securities, the author uses the price and trading volume of securities of listed companies at the beginning of the year, the end of the first quarter, the second quarter, the third quarter, and the fourth quarter of 2022. The analysis results show that six characteristics Financial reporting information quality has a positive impact on the liquidity of securities in companies listed on the Vietnamese stock market. Among them, the most influential characteristic is honesty. The study offers suggestions based on the aforementioned findings to improve the quality of financial report information in order to promote liquidity. At the same time, to make the recommendations feasible in practice, the study also proposes recommendations to create a legal corridor and practical support for relevant factors. The author recommends that businesses need to have independent auditing companies audit annually, and those companies need to be reputable in the professional world.

Assessing the Impact of Internal Control, Accounting Systems, and Organizational Commitment on Financial Accountability through Financial Information Quality

Assessing the Impact of Internal Control, Accounting Systems, and Organizational Commitment on Financial Accountability through Financial Information Quality

The Impact of Credit Market Development on Auditor Choice: Evidence from Banking Deregulation

ABSTRACTWe exploit the staggered state‐level adoption of the Riegle‐Neal Interstate Banking and Branching Efficiency Act (IBBEA) to examine how banking deregulation and the resulting increase in bank competition affect firms’ auditor choices. We find that an exogenous increase in the degree of interstate branch banking deregulation leads to a reduction in firms’ propensity to engage a Big N or industry expert auditor. This main result, when combined with our cross‐sectional analyses, offers evidence suggesting that deregulation leads to less demand for higher quality auditors because (1) firms have increased access to credit, which reduces the benefits of higher audit quality; (2) entering banks’ lending expertise substitutes for higher quality financial statements; (3) incumbent banks with less lending expertise seek to protect their rents by preferring that borrowers provide lower quality financial statement information; and (4) external stakeholders delegate their monitoring to banks to a greater degree, resulting in less demand for higher quality financial statements. As such, our study sheds light on how the U.S. credit market's infrastructure shapes firms’ auditor choice decisions.

Pengaruh Kualitas Informasi Keuangan Terhadap Kinerja UMKM Di Kota Bandar Lampung

Micro, Small, and Medium Enterprises (MSMEs) are a crucial sector in economic growth. However, they often face challenges in financial management, including accurate and reliable financial reporting. Based on a research activity, it was found that a significant portion of MSMEs do not regularly manage and present financial information. This is attributed to several issues encountered by MSMEs. The main identified problem is the limitation of competent human resources. Most MSMEs lack adequate financial experts. Additionally, some MSMEs face issues such as a lack of understanding of proper financial recording for informed business decision-making. Constraints in time and knowledge of financial management also hinder effective financial information management. This research was conducted on MSMEs located in Bandar Lampung. The sampling technique employed was purposive sampling, in which the researcher specified certain criteria to filter an appropriate sample size deemed relevant to the research objectives. A questionnaire was utilized as a research tool, employing the Structural Equation Model (SEM) for data analysis, including outer model and inner model testing. The research findings indicate that the quality of financial information positively influences the performance of MSMEs in Bandar Lampung.

The relationship between statements of government accounting standards, internal control systems, and human resources on the quality of financial reports: A literature review

The aim of this research is to analyze the management and quality of financial report. The research method we uses is by using systematic review. Through searching for articles in the SINTA journal database, this research identified significant findings related to implementing PSAP, Government Internal Control System, and Human Resources competency on the quality of financial reports in the regional government, cooperative and Public Service Agency sectors. Various existing studies highlight the positive impact of implementing accounting standards and SPIP on the quality of financial reports, with a good understanding of accounting by HR being key. Optimizing Government Internal Control System, implementing SAPD, and effective internal control are the focus to ensure the integrity and quality of financial reports. Increasing understanding of accounting by HR through investment in training is vital, along with consistent implementation of SAPD to ensure compliance with government accounting standards. Focusing on optimizing Government Internal Control System is essential in preventing errors and improving the quality of financial information, ultimately resulting in more reliable and accountable financial management and strengthening stakeholder trust.

How Does Financial Accountability, Information Quality, and Altruism Drive Business Zakat Compliance Through Business Growth Mediation?

This study aims to address knowledge gaps through a holistic approach, considering individual and organizational factors in the context of business zakat compliance. It involves financial accountability, information quality, and altruism as relevant factors, with information quality and altruism being mediated by business growth. Data were collected through questionnaires from 100 Small and Medium Enterprises in Palu City, Donggala Regency, and Sigi Regency, using purposive sampling. The analysis employed SEM PLS methodology. Findings indicate no significant support for the relationship between financial accountability and business growth. Conversely, information quality and altruism exhibit significant relationships. In the context of business zakat compliance, no relationships were found between financial accountability, information quality, and altruism. However, the relationship between business growth and zakat compliance proved to be significant. Mediation analysis revealed that only the relationships between information quality, altruism, and zakat compliance are mediated by business growth, while the relationship between financial accountability and zakat compliance is not mediated. Study limitations include specific context, reliance on cross-sectional data, and a narrow focus on SMEs in a specific industry. Future research recommendations encompass longitudinal studies, sample expansion, and exploration of the cultural and technological impacts on financial practices and compliance

Financial Reporting Quality and Information Asymmetry: A Review of Empirical Literature

This paper reviewed empirical works conducted and published from 2008 to 2013 regarding impact of financial reporting quality on information asymmetry as implied by signaling theory. An integrative/critical review approach was used. Findings of the paper are that despite being mixed and varied, the results obtained by most of the studies carried out are in agreement with signaling argument, that is, sending high quality financial information (FRQ) trims down the level of information asymmetry between corporate firms and financial statements users. Also, in line with the summary of major findings, the paper concluded that signaling theory best explain the relationship between FRQ and IA and thus, engaging in FRQ will substantially reduce asymmetric information in capital markets and other economic dealings involving corporate firms and financial statements users. Based on the conclusions drawn, the paper suggested that corporate firms should be engaging in timely reporting of relevant information to users of their financial statements.

Capital market opening and commercial bank risk: Evidence from “Shanghai–Hong Kong Stock Connect”

Based on the implementation background of the “Shanghai–Hong Kong Stock Connect” policy, this paper explores the impact of capital market opening on the commercial banks risk. The results show that the capital market opening has a positive impact on the commercial banks risk. Financial information quality and external information environment are important transmission mechanisms for the capital market opening to affect the commercial bank risk. The impact of capital market opening on the commercial bank risk is heterogeneous, and it has a stronger effect on the risk reduction of commercial banks with larger asset size and capital flow ratio. This study objectively presents the effect of the implementation of the “Shanghai–Hong Kong Stock Connect” policy, and provides empirical evidence for commercial banks to avoid the capital market risks they may face.

Objectification and verification of financial information

The term “financial information” is being actively introduced into all spheres of the economy as a key resource for supporting managerial decision-making at the micro and macro levels. However, it happens that this definition is treated ambiguously, haphazardly, which makes it difficult to apply new scientific knowledge in the regulatory and legal field and in practice. The purpose of the study is to identify the concept of “financial information” for its relevant use in rulemaking and science, as well as to determine the verification features of this type of information generated by economic entities in order to ensure reasonable user confidence in its quality. On the basis of comparative legal and abstract-logical methods, analysis of Russian and international accounting and auditing standards and recommendations, as well as best practices of their application, the key features of financial information are identified, including the form of presentation, relevance to users, compliance with the chosen concept, responsibility for the formation and release. The main characteristics of financial information prepared on the basis of the concepts of its reliable presentation, compliance and special purpose are formulated; its key feature is identified — a time criterion that makes the quality of financial information dependent on the order of its receipt (education), the dates of approval and access to it by the user. It is established that one of the main reasons for the high risk of irrelevant use of financial information in time are events after the reporting date. To determine the directions of risk management, the author’s classification of these events has been developed depending on the probability of a negative forecast. Recommendations on maintaining proper qualitative characteristics of financial information by means of control are given. The practical significance of the study is to increase the objectivity of decision-making on the quality of financial information for both direct use and during internal and external control.

Analyzing Information System Quality and Financial Information Quality: An Evidence of Local Government Organizations in Indonesia

End-user satisfaction is a potential substitute for utility in decision-making, user satisfaction is a measure of the extent to which an information system meets the information needs of its users. The purpose of this study was to determine the effect of the regional management information system quality and the financial information quality on end-user satisfaction. The method used in this research is descriptive and verification with a quantitative approach. The sample used in this study was 50 people in Local Government Organizations of Bandung City Government in Indonesia. The analytical tools used are Multiple Linear Regression, Correlation Analysis Test, Determination Analysis Test, and Partial Hypothesis Test. The results showed that the regional management information system quality had a positive and significant effect on the end-user satisfaction and the financial information quality had a positive and significant effect on end-user satisfaction at the Local Government Organizations of Bandung City Government. This study will contribute both to practitioners and academics related to end-user satisfaction in implementing the quality of information systems and the quality of financial information used. This study provides additional knowledge about financial information quality which is used as the basis for making decisions by local government organizations.

DETERMINAN AKUNTABILITAS KEUANGAN DENGAN KUALITAS INFORMASI LAPORAN KEUANGAN SEBAGAI VARIABEL INTERVENING PADA BADAN KEUANGAN DAERAH KOTA DEPOK

This paper aims to study how internal control system and human resource competence affect the information quality of local government financial statement and how its impact on financial accountability. The data collection method was a questionnaire distributed to 50 samples of the Badan Keuangan Daerah, Kota Depok. The collected data was processed using SPSS 27.00 with t test and Path Analysis. The research results show that the internal control system and human resource competency have a positive effect on the local government financial statement. The internal control system and human resource competency also have a positive effect on financial accountability, both directly and indirectly, mediated by the quality of local government financial report information. In addition, the quality of local government financial report information has a direct and positive effect on financial accountability. The results of this research can be useful for the government as input and consideration in determining policies, especially regarding improving the quality of information on government financial reports and financial accountability.

The enforcement of accounting standards and the quality of financial information

The enforcement of accounting standards and the quality of financial information