Explore the vast range of titles available.

Using a new database that contains accounting data for a large sample of U.S. private firms, we provide an investigation of financial reporting quality (FRQ) of U.S. private versus public firms. We find that in general public firms have higher accrual quality and are more conservative. The results are consistent with public firms' reporting reflecting greater demand for financial information. However, these reporting qualities of public firms are mitigated or eliminated in settings where public firms are more likely to manage earnings or face reduced demand for their financial information. Our study contributes not only to the current debate on private versus public financial accounting, but also to the broader literature attempting to understand the determinants of FRQ.

Overconfident managers overestimate future returns from their firms' investments. Thus, we predict that overconfident managers will tend to delay loss recognition and generally use less conservative accounting. Furthermore, we test whether external monitoring helps to mitigate this effect. Using measures of both conditional and unconditional conservatism respectively, we find robust evidence of a negative relation between CEO overconfidence and accounting conservatism. We further find that external monitoring does not appear to mitigate this effect. Our findings add to the growing literature on overconfidence and complement the findings by Schrand and Zechman [2011] that overconfidence affects financial reporting behavior.

We outline several properties of IFRS that potentially affect the contractibility or the transparency of financial statement information, and hence the use of that information in debt contracts. Those properties include the increased choice among accounting rules IFRS gives to managers, enhanced rule-making uncertainty, and increased emphasis on fair value accounting. Consistent with reduced contractibility of IFRS financial statement information, we find a significant reduction in accounting-based debt covenants following mandatory IFRS adoption. The reduction in accounting covenant use is associated with measures of the difference between prior domestic standards and IFRS. Because IFRS adoption changed financial reporting in many ways simultaneously, it is difficult to trace the decline in accounting covenant use to individual IFRS properties, though we report larger declines in accounting covenant use in banks, which have a higher proportion of assets and liabilities that are fair-valued. Our findings are better explained by reduced contractibility than by increased transparency, which would predict reduced nonaccounting covenant use as well, whereas we observe increases. Overall, we conclude that IFRS rules sacrifice debt contracting usefulness to achieve other objectives, such as provision of accounting information relevant to valuation.

Purpose This paper aims to define and measure the environmental capabilities that are applied when the circular economy (CE) is introduced in businesses. Founded on the dynamic capabilities theoretical approach, the study analyzes different environmental competences that firms apply during this process. Environmental management systems, corporate social responsibility, reporting and accountability and other environmental accounting practices are studied in the same analytical framework used to study the environmental capabilities that influence the circular scope (CS) of firms. This study contributes to bridging the gap between academic research focused on environmental accounting and that investigating the introduction of the CE in businesses. Design/methodology/approach The results were obtained by using partial least squares structural equation modeling to analyze the relationship between environmental capabilities for the CE and the CS achieved by a sample of Spanish firms with more than 50 employees that expressed interest in the CE, eco-design, eco-innovation and other environmental issues. Findings Based on an analysis using the dynamic capabilities theoretical approach, the results suggest a positive relationship between the CS of firms, their environmental accounting practices and their level of corporate social responsibility (CSR) and accountability. Stakeholders’ pressure – which has a mediating effect on the CS of firms – is also analyzed, adding new insights to recent studies of this topic at the micro-level. The authors also explore whether the CS of businesses, which is related to the degree of their development of capabilities, influences environmental and financial performance. Practical implications The new insights obtained in this study can help overcome the limitations of conventional accounting approaches and incorporates a much broader scale of environmental information that can be applied to CE practices. These results also offer insights to practitioners regarding the internal measurement processes related to the CE and regarding CSR in particular for small and medium enterprises, because these metrics can be partially applied depending on the practices introduced in each firm. For policymakers, a better understanding of the CE’s introduction into businesses will contribute to the design of policies that can enhance its deployment, for example, by providing tools that set up regional priorities depending on the CE-related practices adopted by the firms located in the territory. Social implications A CE involves the transformation of a linear economic model into a circular one to reduce dependence on raw materials and energy and to reduce the environmental impact of production and consumption. Understanding how to manage the specific competences that integrate capabilities applied to the CE will allow firms to improve their social and environmental reporting. In addition, other social implications of this study relate to improving relationships with consumers and stakeholders and to the practice of social corporate sustainability. Originality/value This study goes beyond previous research on the CE to extend the authors’ knowledge about its adoption at the micro-level by taking a transversal approach, as its subject spans the fields of environmental accounting and the CE while addressing both in a framework of analysis. The analysis of the accounting concerns of the CE in businesses and the study of concerns related to endogenous environmental competences are quite original under the theoretical framework of dynamic capabilities, and this study is a first step in an incipient line of inquiry.

SFAS 142 requires managers to estimate the current fair value of goodwill to determine goodwill write-offs. In promulgating the standard, the FASB predicted that managers will, on average, use the fair-value estimates to convey private information on future cash flows. The current fair value of goodwill is unverifiable because it depends in part on management’s future actions (including managers’ conceptualization and implementation of firm strategy). Agency theory predicts managers will, on average, use the unverifiable discretion in SFAS 142 consistent with private incentives. We test these hypotheses in a sample of firms with market indications of goodwill impairment. Our evidence, while consistent with some agency-theory based predictions, does not confirm the private information hypothesis.

Investors, regulators, academics, and researchers all emphasize the importance of financial statement comparability. However, an empirical construct of comparability is typically not specified. In addition, little evidence exists on the benefits of comparability to users. This study attempts to fill these gaps by developing a measure of financial statement comparability. Empirically, this measure is positively related to analyst following and forecast accuracy, and negatively related to analysts' dispersion in earnings forecasts. These results suggest that financial statement comparability lowers the cost of acquiring information, and increases the overall quantity and quality of information available to analysts about the firm.

The use of more or less positive language in corporate disclosures has been the subject of increased interest in the academic literature. We add to this stream of research by examining whether there is a manager-specific component in the tone of earnings-announcement related conference calls. We find that the tone of conference calls that is not explained by current performance, future performance, and strategic incentives has a significant manager-specific component. We also find that tone is significantly associated with manager-specific factors such as early career experiences and involvement in charitable organizations. Taken together, our findings indicate that, in addition to reflecting current and future performance, the tone of conference calls is significantly influenced by a manager-specific tendency to be optimistic or pessimistic. We also find some evidence of a manager-specific component to conference call returns, which is consistent with manager-specific optimism impacting investors’ interpretation of disclosures made in conference calls.

Purpose – The purpose of this paper is to provide theoretical and empirical insights into the effective use of external accounts by social activists in conflict arenas in order to bring about change. Design/methodology/approach – This paper presents a longitudinal case study of Action on Smoking and Health UK (ASH) and their use of external accounts and other activist practices during the period 1999-2010. The authors explore these practices from the perspective of one organisation engaged in conflict arenas concerning the (un)acceptability of tobacco production, consumption and governance. The authors conduct the exploration based upon a dynamic conflict arena framework that attends to the range of external accounting and activist practices, tactical intentions and states of conflict used by ASH to confront the tobacco industry and bring about change in tobacco governance. Findings – The study identifies the use of a diverse range of external accounts and other activist practices. This assemblage of practices was used to confront, counter-act and to co-operate with actors engaged in tobacco-related conflicts. The evidence suggests that the deployment of different types of external accounts by ASH was aligned to the context of the particular conflict arena involved, and was influenced by the strategy and engagement tactics of the activists and other actors, as well as power dynamics and acceptability of the tobacco governance in the conflict arena. Whilst ASH used different external accounts in specific episodes of activism, these individual accounts also contributed to an emerging holistic account of the unacceptable consequences of tobacco production, consumption and governance. Originality/value – This study provides new theoretical and empirical insights into how external accounts can contribute to the problematisation of governance and development of social and environmental change agendas. The dynamic conflict arena framework developed in this paper creates new visibilities and possibilities for developing external accounting practices and for researching this fast-developing area of social and environmental accounting.

PurposeThe purpose of this paper is to explore the utilization of the social network, Facebook, as an instrument of stakeholder engagement and dialogic accounting in American charitable foundations, specifically non-profit organizations that are dedicated to philanthropy.Design/methodology/approachThe research motivation involves whether online interaction through Facebook could represent a channel of dialogic accounting that engages organizational stakeholders. This paper aims to understand if this dialogue is geared to generate a consensus necessary to deliberate over decisions that are shared between all stakeholders, or if a divergent and agonistic perspective, which highlights struggles and differences between actors, prevails. The present study employs a form of content analysis that takes into account the Facebook pages of the 100 largest American philanthropic foundations.FindingsThe primary goal of the analysis is to examine the discrepancies in terms of how (and how much) large organizations are using Facebook. The study wants to provide more details on which kind of information large organizations are willing to disclose and collect on Facebook, and to evaluate the level and type of interaction between foundations and users.Research limitations/implicationsFurther research could build on the present study by providing in-depth case studies and extending the analysis to other social media and other types of organizations.Originality/valueSocial media represent a powerful mechanism to engage stakeholders in a polylogic conversation. However, the scholarly literature confirms that further studies are necessary to understand how companies and organization can exploit this potential.

This study explores motivations underlying managers' resource adjustments. We focus on the impact of incentives to meet earnings targets on resource adjustments and the ensuing cost structures. We find that, when managers face incentives to avoid losses or earnings decreases, or to meet financial analysts' earnings forecasts, they expedite downward adjustment of slack resources for sales decreases. These deliberate decisions lessen the degree of cost stickiness rather than induce cost stickiness. The results suggest that efforts to understand determinants of firms' cost structures should be made in light of the managers' motivations, particularly agency-driven incentives underlying resource adjustment decisions.