Financial Reporting Quality Research Articles

Corporate environmental, social, and governance activities and financial reporting quality: An international investigation

This paper examines the impact of firms' environmental, social, and governance (ESG) activities on financial reporting quality (FRQ). The study uses 45,877 firm-year observations from 65 countries between 2003 and 2021. In the research model, firm characteristics and macroeconomic and institutional structure characteristics of the countries are controlled for. This study finds that firms with higher ESG scores have higher FRQ. Additionally, our mediation analysis indicates that financial distress costs serve as a crucial mechanism through which ESG influences FRQ. Our findings are robust after accounting for alternative measures of FRQ, different sampling scenarios, endogeneity issues, and simultaneity bias.

Moderating Influence of Idiosyncratic Diversity on the Relationship between Accounting Ethics and Financial Reporting Quality

Purpose- The study investigates the moderating influence of idiosyncratic diversity on the relationship between accounting ethics and financial reporting quality, against the backdrop of the unending corporate collapses and their antecedent effect on the profession of accounting. Design/Methodology/Approach- The study is anchored on the positivist philosophy with a deductive research strategy. We employed theoretical triangulation having combined agency theory and resource dependency theory. The sample size of three hundred and eighty-four respondents was established using the Cochran (1977) approach for the infinite population. Primary data were collected for the study through a survey approach and analysed using the Ordinary Least Squares regression technique. Findings- The study validates the significant relationship between accounting ethics and financial reporting quality in extant literature. In addition, we found a significant moderating influence of idiosyncratic diversity on the relationship between accounting ethics and financial reporting quality. Practical implications- The study demonstrates the strategic importance of accountants of diverse nationalities in delivering quality financial reporting in Nigeria. Research limitations/implication- The research is a country-wide study of accountants in Nigeria which enhances the extensive generalization of the outcomes. Originality/value- While extant studies have mainly been preoccupied with the accounting ethics-financial reporting dynamics, the current study focuses on understanding the moderating influence of idiosyncratic diversity on the relationship between accounting ethics and financial reporting quality. In addition, the country-wide approach adopted circumvented the limitation of micro numerosity of data which has been the bane of major prior studies.

IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE AND CREATIVE ACCOUNTING ON FINANCIAL REPORTING QUALITY

This research aimed to test whether the implementation of governance in banking in Indonesia influenced the possibility of unethical creative accounting which had an impact on the quality of banking financial reporting. The sample used in this research were accountants who worked at banks in the DKI Jakarta and Bandung areas, totaling 315 respondents. The data analysis technique used was the Structural Equation Model. The research results showed that the implementation of good governance influences the occurrence of unethical creative accounting and the quality of financial reports. The implementation of good governance also influenced the occurrence of creative accounting which had an impact on the quality of financial reports. This showed the importance of implementing good corporate governance in limiting the occurrence of creative accounting which led to unethical actions, to provide reliable quality financial reports for its users. This research contributed to empirical testing of decision-usefulness theory which states the need for rules that must be fulfilled in presenting accounting information reports so that they could be useful in making decisions for users.

Analysis of the Implementation of the Regional Management Information System (SIMDA Next-G ) on the Quality of Bima City Government BPKAD Financial Reports

This research aims to analyze the application of the Regional Management Information System (SIMDA Next-G) to the quality of Bima City BPKAD financial reports. This research uses descriptive research methods with a qualitative approach. The informants used in this research were the Head of Accounting and Reporting, Head of Budget and Operator. Data was collected through interviews and documentation. Furthermore, the data sources used are primary data and secondary data. Based on the results of the research that has been carried out, TAM is obtained, which consists of 5 primary constructs, namely 1) Perceived usefulness, 2) Perceived ease of use, 3) Attitude to wars behaviour (Attitude towards behaviour), 4 ) Behavioral intention (the perpetrator's interest), and 5) Behavior (Behavior). For perceived usefulness, the application of SIMDA-NG in inputting financial report data has been maximized because it has been able to improve performance, increase productivity, and help complete work quickly and errors rarely occur. However, records of input times are not available. Based on this research, the quality of Bima City BPKAD financial reports using SIMDA-NG already has feedback and predictive benefits, is presented on time and is complete. So, the Bima City BPKAD financial report is relevant. Regarding reliable indicators, Bima City BPKAD's financial reports have been presented honestly, verifiably and neutrally. Bima City BPKAD applies the same policies from year to year, so its financial reports can be compared. Using the new system, the quality of financial reports in the previous period with the current one can also be compared. Moreover, for indicators that can be understood, the Bima City BPKAD financial report can be understood because it is presented in a form and terms that are easy to understand.

Dampak Sistem Pengendalian Internal terhadap Kualitas Laporan Keuangan dan Pemanfaatan Teknologi Informasi sebagai Pemoderasi

The purpose of this research is to evaluate the impact of Internal Control System (SPI) on the quality of financial reports (KLK) with the use of Information Technology (PTI) as a moderator. The research method adopted is quantitative. The data utilized in this study are primary data collected through an online questionnaire distributed via Google Forms. The data analysis technique employed is Partial Least Square (PLS) using smartPLS 3 software, with a total of 45 respondents from manufacturing companies in West Java. The research findings indicate that SPI has a significant positive impact, and PTI strengthens the influence of SPI on KLK. Limitations of the study include difficulties in collecting online questionnaire data according to the required criteria. The contribution of this research lies in the fact that PTI can enhance the implementation of SPI on KLK.

Investment efficiency of targeted S-curve industries: the roles of CEO duality and financial reporting quality

PurposeThe purpose of this study is to examine the association between the combined roles of chief executive officer (CEO)-chairman titles (CEO duality) and investment efficiency, defined as a lower deviation from expected investment for targeted S-curve firms used to propel an innovation-driven economy. This study also aims to investigate the moderating effect of financial reporting quality on this association.Design/methodology/approachThis paper focuses on the ten targeted S-curve industries – under the definition of the Thailand 4.0 model – listed on the Stock Exchange of Thailand (SET) from 2000 to 2019. Data related to CEO/chairman titles and investment supports were manually collected from the annual reports, the SET market analysis and reporting tool database and the company websites. Financial data used to estimate investment behaviors and discretionary accruals were extracted from 1999. The study analyzes unbalanced panel data using fixed-effects regressions. Additional tests embrace replacing the sample with nontargeted firms, partitioning into granted and nongranted firms, adding CEOs’ demographic moderators, using alternative variable measures and analyzing for lagged independent variables.FindingsThe main findings show that CEO duality reduces overinvestment but worsens underinvestment in targeted firms. Financial reporting quality (FRQ) appears to strengthen CEO duality in mitigating extreme spending but has no impact on the association between CEO duality and underinvestment. Additional results, for example, conclude that CEO duality has no association with both over- and underinvesting at nontargeted firms, but its effect becomes positively significant on overinvestment when financial reporting quality is high. The negative association between CEO duality and overinvestment is found only in government-granted and targeted firms. FRQ encourages CEO duality in lowering overinvestment among targeted firms without grants. CEOs’ female and serviced early years appear to elevate those main findings.Practical implicationsThese findings assist innovative corporations in choosing a proper leadership structure to cope with investment inefficiency. The research gives the government and regulatory bodies an insight into the qualifications of the leadership structure and financial information that helps them put forward effective policies.Originality/valueTo the best of the author’s knowledge, this study is among the first to establish the association between CEO duality and investment efficiency for innovation-driven firms in a transforming economy. The study fills the gap in the literature on management, accounting and finance by unveiling the interplay between dual leadership and financial reporting in affecting the efficiency of investments.

Influence SIA, SPI, and Budget Targets the Quality Financial Reports PT. Mappadeceng Jaya Lestari

This study aims to analyze the partial and simultaneous influence between accounting information systems, internal control systems, and budget targets on the quality of financial reports PT. Mappadeceng Jaya Lestari Parepare City to determine and analyze which variables have the most influence or dominant on the quality of financial reports PT. Mappadeceng Jaya Lestari Parepare City, This study uses quantitative data and the data sources used are primary data and secondary data. The analysis method used is multiple regression analysis, t-test, f-test, correlation coefficient (r) and coefficient of determination (r2). The results showed that the accounting information system and budget goals partially had a positive and significant effect on the quality of financial statements PT. Mappadeceng Jaya Lestari Parepare City, while the internal control system partially did not have a positive and significant effect on the quality of financial statements PT. Mappadeceng Jaya Lestari Parepare City, but simultaneously or together had a positive and significant effect on the quality of financial statements PT. Mappadeceng Jaya Lestari Parepare City and the accounting information system variable is the most influential or dominant variable on the quality of financial statements PT. Mappadeceng Jaya Lestari Parepare City.

Accounting data governance and its influence on financial report quality: Insights from commercial banks

This study aimed to measure the impact of implementing mechanisms of accounting data governance, represented by International Accounting Standards, internal auditing, external auditing, audit committees, disclosure and transparency, and performance evaluation, on the quality of financial reporting data for the commercial banks listed on the Amman Stock Exchange, totaling (15) banks. To achieve the objectives of this study, a descriptive-analytical approach was adopted by developing a questionnaire to collect the primary data measuring the study variables. The questionnaire was distributed to employees in the financial and control departments of these banks, with a total of (375) respondents from the total study population of (733) individuals. Appropriate statistical methods were used to analyze the data, test hypotheses, and the results of this study revealed a strong positive impact of five variables of accounting data governance mechanisms on achieving the quality of financial reporting data. These variables are ranked from highest to lowest in terms of the strength of impact and correlation with the quality of financial reports: disclosure and transparency, external auditing, International Accounting Standards, internal auditing, and audit committees. However, there was no impact of the performance evaluation governance variable on achieving the quality of financial reporting data. These results call on the management of commercial banks in the study to commit to the objective implementation of the requirements of accounting data governance mechanisms as stipulated by international professional assemblies.

KUALITAS LAPORAN KEUANGAN: LATAR BELAKANG PENDIDIKAN DAN PENGALAMAN INTERNASIONAL CFO

Quality financial reports are very necessary for the smooth running of company operations. Companies need competent managers to improve the quality of financial reports. Incompetent managers can result in poor-quality financial reports, causing information asymmetry, damage to the company's reputation, and decreased investor confidence which can hamper the company's operational activities. This research aims to determine the effect of the Chief Financial Officer (CFO) who is a graduate of a reputable university and has international experience in the field of finance on the quality of financial reports. This research was conducted on 563 companies listed on the IDX from 2010 to 2019. Through regression Generalized Least Square (GLS), research finds that CFOs who graduate from reputable universities tend to be able to improve the quality of financial reports, but not CFOs who have international experience in the financial sector. This research shows that the CFO's educational background is very important in supporting the improvement of the quality of financial reports. Therefore, companies must pay attention to the CFO's educational background to support the manager's performance in improving the quality of financial reports.

Pengaruh Penggunaan Sistem Informasi Akuntansi E-Kasir Dan Keahlian Pemakai Terhadap Kualitas Laporan Keuangan Pada UMKM Di Provinsi Jawa Tengah

This research aims to examine the effect of implementing an E-cashier accounting information system and user expertise on the quality of financial reports for MSMEs in Central Java. The population used in this research is all MSMEs in Central Java, totaling 183,181 units in the first quarter of 2023. The data used in this research is primary data obtained directly from MSME actors. The research sampling technique used the purposive sampling method. The data analysis used is the Structural Equation Model (SEM). The findings of the empirical analysis show that the e-cashier accounting information system has a positive effect on the quality of MSME financial reports in Central Java province, while user knowledge and user skills have no effect on the quality of MSME financial reports in Central Java Province.
 Keywords: E-Cashier, Financial Reports, MSMEs

Impact of IPSAS Adoption on Financial Reporting Quality in Nigeria: A Case of South-Western Nigeria

The study investigated the effect of IPSAS Adoption of financial reporting quality using the six south western states in Nigeria. The public service in the six states of the south western Nigeria is the focus of the study. A total of 400 respondents are covered in the survey and professional staff like auditors and accountants in the public service form the nucleus of the respondents. Well-structured questionnaire was constructed and administered. The data harvested was analyzed using Structural Equation Modelling. Findings from the analysis revealed that. Generally, the adoption of IPSASs contributed to an improvement in financial reporting quality in the sample States. It is however recommended that all states in the federation should migrate to full implementation of accrual based IPSASs accounting systems because of its positive effect on financial reporting quality.

The impact of the corporate risk management model on the quality of financial reports in Jordanian commercial banks

The objective of this study is to empirically elucidate the influence of the corporate risk management model on the quality financial reports within the context of Jordanian commercial banks, with a specific focus on two critical dimensions: relevance and faithful representation. According to signal theory, each company tries to reduce information asymmetry by providing high-quality of financial reports that have the ability to demonstrate their qualities, depending on that concept. The predominant trend in contemporary practice is the utilization of risk management as a tool to elevate the quality of financial reports. This, in turn, assists in curtailing the manipulation of financial reports, culminating in the issuance of reports characterized by credibility and transparency. This, in turn, reflected on all different users of financial reports in the decision-making process. To accomplish the study's objectives, a descriptive-deductive (analytical) research approach was adopted. The research population encompassed a total of thirteen commercial banks operating at Jordan. Data were collected through a structured questionnaire administered to a randomly selected sample of 234 employees from the financial and supervisory departments of these banks. The study's results strongly suggest that the risk management model has a big effect on the quality of financial reports in Jordanian banks. This model includes things like setting goals, event identification, risk assessment, risk response, supervisory activities, and the evaluation of the financial reporting system.

Are Audit Committees Overloaded? Evidence from the Effect of Financial Risk Management Oversight on Financial Reporting Quality

Audit committee (AC) responsibilities have increased over time, prompting concerns that overloading the AC with too many duties may impair the AC’s ability to oversee financial reporting. Using new AC charter-based proxies to measure AC responsibilities, we find that an emphasis on the AC overseeing financial risk management (which is a noncore AC duty) is associated with worse financial reporting quality, as proxied by restatements—consistent with the argument of AC overload by distraction. This overload effect is attenuated when an AC has more directors to share duties or when the AC retains an expert auditor who can serve as a substitute for AC oversight. This overload effect is accentuated when AC members are busy with multiple board appointments or when the external auditor is busy with other audits. We also find that AC financial risk oversight is associated with more AC meetings and greater turnover of AC directors, consistent with the notion of overload. In sharp contrast, we find that greater AC oversight over internal controls (which is a core AC duty) is associated with improved financial reporting quality. Overall, we document that the nature of AC duties impacts the AC’s ability to promote financial reporting quality and that noncore duties may overload ACs. This paper was accepted by Suraj Srinivasan, accounting. Funding: The authors are grateful for funding provided by the Eller College of Management at the University of Arizona, the Broad College of Business at Michigan State University, and the Carson College of Business at Washington State University. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.00360 .

An Empirical Analysis of Impact of XBRL on Quality of Financial Reporting in India

The efficient and effective communication of business and financial information to end-users helps to get clear insights on the business outlook and assists them in making timely decisions. Financial reporting acts as a vehicle to disseminate the financial information of the business to various interested parties by communicating operating and financial information through financial statements, notes to financial statements and other footnotes in the annual report. Nowadays stakeholders of the business are more expecting both financial and non-financial information to be communicated in a single annual report. Therefore, the corporate houses are required to communicate enhanced information in their annual reports to facilitate the stakeholders in their decision-making process. Communication of enhanced information in the annual report is only possible with the help of the EBR Model (Enhanced Business Reporting Model) which is only possible by the application of XBRL (Extensible Business Reporting Language) to the business reporting purpose. The present paper is intended to examine the impact of XBRL on the quality of financial reporting. For this purpose, the study analysed the financial reporting pattern of 23 select companies in India through the analysis of their annual reports from 2005 to 2020. To derive valid conclusions Tukey test, dummy variable regression analysis techniques were employed and concluded that XBRL has made a significant impact on the quality of financial reporting of select companies.

The Impact of Financial Inclusion Dimensions on Improving the Quality of Financial Reports Published by Banks: A Field Study on a Sample of Sudanese Banks

This study aims to investigate the impact of customers’ access to financial services on improving the quality of financial reports. It also explores how customer utilization of financial services and the quality of services provided enhance the quality of published financial statements. A questionnaire was directed at a sample of employees working in Sudanese banks, with a total of 30 respondents. After conducting the field study, the researcher confirmed the hypotheses and obtained several key findings. Notably, a significant obstacle to financial inclusion is the lack of awareness regarding its importance among a large segment of clients. Additionally, the high frequency of bank account usage indicates that many Sudanese society members are under the umbrella of financial inclusion. Financial inclusion is a governmental regulatory tool that controls bank accounts and safeguards clients. Given its impact on financial inclusion, improving the quality of financial reports becomes crucial. The researcher recommends several actions, including raising awareness about financial inclusion and using it to monitor investors within banks. This encourages clients to participate in financial inclusion. Furthermore, banks should emphasize the importance of enhancing financial reporting quality, as it leads to increased investment and engagement with financial institutions. Efforts to establish financial inclusion in the Sudanese banking environment should be intensified, bolstering confidence in the banking sector. Finally, banks should provide specialized services for individuals with limited income and seek help from regional experiences.

Pengaruh Standar Akuntansi Keuangan Daerah, Teknologi Informasi dan Kualitas Aparatur Terhadap Kualitas Laporan Keuangan

The aim of the research is to analyze the influence of the application of regional financial accounting standards, the use of information technology and the quality of regional government apparatus on the quality of regional financial reports in the Regional Apparatus Organization (OPD) of Jepara Regency. The population is 46 OPD financial managers. The research results show that the application of regional financial accounting standards has a significant positive effect on the quality of regional financial reports, as shown by the value of tcount (2.006) > ttable (1.65630) and sig. 0.016 < 0.05; The use of information technology has a significant positive effect on the quality of regional financial reports, as shown by the value of tcount (2.567) > ttable (1.65630) and sig. 0.009 < 0.05; and the quality of regional government apparatus has a significant positive effect on the quality of regional financial reports as shown by the value of tcount (2.434) > ttable (1.65630) and sig. 0.015 < 0.05.

العلاقة بين مخاطر السيولة والربحية في البنوك التجارية المدرجة ببورصة عمان

This article demonstrates the impact of sustainability accounting with its dimensions: environmental, economic, and social on the quality of financial reports of ASE-listed pharmaceutical and chemical firms. To achieve the research objectives, the applied approach based on the financial reports and statements of the research sample firms is used as the main source of research data between (2016) and (2021). A sample of (27) firms is selected from the number of firms in the field of various industries that represent the research population of (53) firms, i.e. (51%) of the research population that meets the criteria for selecting the research sample. Statistical methods are also used to test the hypotheses and attain the results. The findings indicate that the environmental, economic, and social dimensions of sustainability accounting activities partially or completely affect the financial reports’ quality through simple and multiple regression models. The results of the statistical analysis also show that increasing the reporting of sustainability dimensions leads to an increase in the financial reports’ quality of the firms under research. From the research perspective, it is a logical result as the firms’ departments and regulatory institutions tend to provide appropriate and complete information to the beneficiaries and stakeholders. The research recommends supporting the ASE-listed firms that adopt initiatives related to reporting on sustainability accounting, including the Fourth Generation Global Reporting Initiative (GRIG4), and reviewing the listing and disclosure instructions on the ASE by including reporting on sustainability accounting as one of the main requirements for disclosure and listing on the stock exchange.

The Analysis of Financial Reporting Quality and Firm Value

The objective of this research is to obtain empirical evidence about the effect of financial reporting quality on firm value. Financial reporting quality is measured using two proxies, accrual quality through Ball-Shivakumar Model (AQ) and earnings management through Modified Jones Model (EM). Firm value is measured using share price, Price to Book Value, Tobin’s Q, and Market Value-Added. Control variables used are leverage (Debt to Equity Ratio), profitability (Return on Asset), and firm size (ln total assets). This study focuses on manufacturing businesses that were listed on the Indonesia Stock Exchange during the years 2018 and 2021. The sample was chosen through a purposive sampling technique, specifically targeting companies listed on the Indonesia Stock Exchange that operate in the manufacturing sector and provide audited financial statements. Analyzed the secondary data utilizing descriptive statistics, normality test, classical assumption tests, and hypothesis testing. The findings of this investigation are (1) AQ has no effect on share price, PBV, Tobin’s Q and MVA (2) EM has positive and significant effect on all proxies of firm value, except MVA. The quality of financial reporting, the level of leverage, the size of the firm, and its profitability all have a simultaneous and considerable impact on the value of the firm.

Determinan Kualitas Laporan Keuangan Badan Usaha Milik Desa Di Kabupaten Klaten

The purpose of this study was to examine the quality of BUMDesa financial reports in Klaten Regency through the influence of accounting understanding, use of information technology, and training. This research is quantitative and sourced from primary data by distributing questionnaires measured using a likert scale. The population included 391 BUMDesa and the sample was determined using purposive sampling so that 42 BUMDesa were obtained with a total of 84 respondents. The research data was processed through data quality test, classical assumption test, multiple linear regression analysis, as well as hypothesis testing on Statistical Package for Social Sciences (SPSS) software version 25. It was concluded that the quality of BUMDesa financial statements in Klaten Regency was significantly influenced by accounting understanding and the use of information technology, but not significantly influenced by training.

The Implications of Ownership Structure and Audit Quality on Financial Reporting Quality: Evidence from Egypt

The Implications of Ownership Structure and Audit Quality on Financial Reporting Quality: Evidence from Egypt