Stephen Owusu-Ansah

TIMELINESS OF CORPORATE FINANCIAL REPORTING IN EMERGING CAPITAL MARKETS: EMPIRICAL EVIDENCE FROM THE ZIMBABWE STOCK EXCHANGE

Abstract This article reports on the results of an empirical investigation of the timeliness of annual reporting by 47 non-financial companies listed on the Zimbabwe Stock Exchange. It also reports on the factors that affect timely reporting by these companies. The results of a descriptive analysis indicate that 98% of the companies in the sample reported promptly to the public (i.e., submitted their audited annual reports to the Zimbabwe Stock Exchange by the regulatory deadline). A two-stage least squares regression identified company size, profitability and company age as statistically significant explanators of the differences in the timeliness of annual reports issued by the sample companies. No evidence was found to support the monitoring costs theory argument, which suggests that highly-geared companies are timely reporters. Furthermore, the empirical data indicate that audit reporting lead time is significantly associated with the timeliness with which sample companies release their preliminary annual earnings announcement, but not with the timeliness of their audited annual reports. Plausible explanations for these findings along with the limitations of the underlying research are provided.

Timeliness of corporate annual financial reporting in Greece

Abstract This paper reports on the results of an empirical investigation of the factors that affect timely annual financial reporting practices by 95 non-financial, group companies listed on the Athens Stock Exchange. A descriptive analysis indicates that 92% of the companies reported early (relative to the 161-day regulatory deadline), 3% reported on the 161st day and 5% reported late. A multivariate regression analysis suggests that large companies, service companies and companies audited by the former Big-5 audit firms have shorter final reporting lead-time. Our tests provide strong empirical evidence to suggest, however, that companies in the construction sector, companies whose audit reports were qualified and companies that had a greater proportion of their equity shares directly and indirectly held by insiders do not promptly release their audited financial statements. No empirical evidence was found in support of the monitoring cost theory. Policy implications of the results for the regulatory agency of the stock market are suggested.

An empirical analysis of the likelihood of detecting fraud in New Zealand

This paper reports on the perceived effectiveness of 56 fraud‐detecting audit procedures used in the stock and warehousing cycle, and the factors that influence the likelihood of detecting fraud in this transaction cycle in New Zealand. We surveyed New Zealand auditors to ascertain their opinion on the effectiveness of these audit procedures. While respondents perceive less than half of the 56 audit procedures as being “more effective” in detecting fraud, more than half are perceived as “moderately effective”. A total of 15 audit procedures are perceived as being “less effective” in detecting fraud. The perceptions of respondents are not affected by the location of their employers in New Zealand, and the type of audit firm employing them. A logit regression analysis suggests that size of audit firm, auditor’s position tenure, and auditor’s years of experience are statistically significant predictors of the likelihood of detecting fraud in the stock and warehousing cycle.

Factors influencing corporate compliance with financial reporting requirements in New Zealand

This paper investigates factors that influence the extent of corporate mandatory disclosure practices in New Zealand over a three‐year period. Researcher‐created disclosure‐scoring templates consisting of mandated information items from three regulatory sources were used to derive indexes of disclosure in financial annual reports of the sample companies. Regression analysis suggests that company age is the most critical factor in explaining the extent of mandatory disclosure practices of the companies. The results also indicate that company size, liquidity, profitability, existence of audit committee, and auditor‐type are consistently positively related to the extent of corporate mandatory disclosure. Further research opportunities are suggested.

Corporate Governance and Accounting Conservatism: Evidence from the Banking Industry

Research Question/Issue: In this paper, we empirically investigate whether US listed commercial banks with effective corporate governance structures engage in higher levels of conservative financial accounting and reporting. Research Findings/Insights: Using both market- and accrual-based measures of conservatism and both composite and disaggregated governance indices, we document convincing evidence that well-governed banks engage in significantly higher levels of conditional conservatism in their financial reporting practices. For example, we find that banks with effective governance structures, particularly those with effective board and audit governance structures, recognize loan loss provisions that are larger relative to changes in nonperforming loans compared to their counterparts with ineffective governance structures. Theoretical/Academic Implications: We contribute to the extant literature on the relationship between corporate governance and quality of accounting information by providing evidence that banks with effective governance structures practice higher levels of accounting conservatism. Practitioner/Policy Implications: The findings of this study would be useful to US bank regulators/supervisors in improving the existing regulatory framework by focusing on accounting conservatism as a complement to corporate governance in mitigating the opaqueness and intense information asymmetry that plague banks.

Corporate social responsibility and earnings management in U.S. banks

Highlights • Reverse causality between EM and CSR is explored in the U.S. banking sector.• Banks actively engaged in EM practices are found to be deeply involved in CSR.• CSR seen as part of legitimation strategies aimed at deflecting attention from EM.• Banks engagement in CSR activities is found to have no significant impact on EM.• Extreme caution should be exhibited when factoring CSR commitment in firm analyses. Abstract Business decision making depends on financial reporting quality. In identifying the drivers of financial reporting quality, proxied by earnings management (EM), prior literature has drawn attention to the association between corporate EM practices and commitment to corporate social responsibility (CSR). Empirical evidence, however, provides inconclusive results regarding the direction of this association. Using simultaneous equations, we examine the bi-directional CSR–EM relationship in U.S. commercial banks. We demonstrate that, although banks that engage in EM practices are also actively involved in CSR, the reverse relationship is not significant. We provide implications for investors, analysts, business participants and regulators.

Relative Value Relevance of Alternative Accounting Treatments for Unrealized Gains: Implications for the IASB

We investigate the relative value relevance of the alternative accounting methods for unrealized gains on investment properties in New Zealand (NZ). Using both the Likelihood-ratio test and the F-test, we find that, while preferred by the NZ standard setter, recognition of unrealized gains in the income statement is not superior to (or significantly different from) recognition of unrealized gains in revaluation reserve in terms of their value relevance. The results are robust to the different research methods we used. Our results have implications for the International Accounting Standards Board in terms of: (i) recognizing changes in fair values of investment properties in the income statement under the revised IAS 40: Investment Property in countries where realization refers to net income available for distribution; (ii) its intent to issue a standard on a single statement of comprehensive income; and (iii) its initiative to reduce or eliminate alternative accounting treatments for similar fact situations in its standards.

The pricing of statutory audit services in Greece

Abstract In this study, we investigate the determinants of corporate audit fees following the liberalization of the statutory audits market in Greece. Though the Greek statutory audits market is liberalized, it is relatively less matured, less competitive and, non- or less-litigious compared to those in the U.K. and U.S. Using data on fees paid to external auditors by 145 companies listed on the Athens Stock Exchange as of December 2000, we note that our results are similar to those of many prior studies conducted on matured, competitive, litigious audit environments. Specifically, we find that the size of an auditee, the number of hours spent on a particular audit engagement, the size of an audit firm and the financial condition of the auditee have positive and significant influence on the amount of fees charged by auditors. In addition, we find that auditor change has a significant negative effect on audit fees, especially in the large auditee segment of the market. Further, as our additional analysis shows, we document that audit fees and audit hours are endogenously related. We perform several sensitivity tests, the results of which suggest that our primary results are robust.

The Effect of Timeliness and Credit Ratings on the Information Content of Earnings Announcements

Abstract This paper investigates the impact of timeliness and credit ratings on the information content of the earnings announcements of Greek listed firms from 2001 to 2008. Using the classical event study methodology and regression analysis, we find that firms tend to release good news on time and are inclined to delay the release of bad news. We also provide evidence that the level of corporate risk differentiates the information content of earnings according to the credit rating category. Specifically, firms displaying high creditworthiness enjoy positive excess returns on earnings announcement dates. In contrast, firms with low creditworthiness undergo significant share price erosions on earnings announcement days. We also observe a substitution effect between timeliness and credit ratings in relation to the information content of earnings announcements. Specifically, we find that as the credit category of earnings-announcing firms improves, the informational role of timeliness is mitigated.