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This study examines whether the length of the relationship between a company and an audit firm (audit‐firm tenure) is associated with financial‐reporting quality. Using two proxies for financial‐reporting quality and a sample of Big 6 clients matched on industry and size, we find that relative to medium audit‐firm tenures of four to eight years, short audit‐firm tenures of two to three years are associated with lower‐quality financial reports. In contrast, we find no evidence of reduced financial‐reporting quality for longer audit‐firm tenures of nine or more years. Overall, our results provide empirical evidence pertinent to the recurring debate regarding mandatory audit‐firm rotation — a debate that has, to date, relied on anecdotal evidence and isolated cases.

The issue of the financial reporting quality has aroused the interest of several researchers whose views converge on the idea that it can be influenced both by factors related to the internal environment of the company, the corporate governance system, the activity of auditors and not only, and also by macroeconomic factors, such as the legal and political system of a country or community or certain accounting/ tax policies. The objective of the research is to highlight, starting from a model validated by Iatridis (2011) for companies in the United Kingdom, the way in which microeconomic factors influence the financial reporting quality of Romanian companies listed on the Bucharest Stock Exchange. The analysis is carried out for the 2013-2019 period. The results indicate that the companies that produce high quality financial reports are large and generally have a high operating cash flow rate, relatively low provisions and disclose more information. Also, these companies are audited predominantly by auditors who are not part of the BIG 4 group.

Background: Reviews have consistently shown that allocation concealment is frequently implemented and reported suboptimally in randomised controlled trials (RCTs). This research aims to pilot engaging with authors of RCTs to explore their knowledge and understanding of allocation concealment implementation and reporting to ascertain areas and mechanisms for their improvement. Methods: Authors that published RCTs in core clinical journals in one month in 2019 were identified. Authors were invited to complete questionnaires to elicit their views and experiences on the implementation and reporting quality focussing on allocation concealment. Methodological quality of allocation concealment was evaluated in this sample by assessing adherence to the Consolidated Standards of Reporting Trials (CONSORT). Results: Reporting was suboptimal, with only 57% of allocation concealment methods reported to be implemented which were judged as adequate, with 18% using sealed envelopes and more than 40% not adequately reporting allocation methods. When exploring allocation concealment, implementation and reporting questionnaires were found to elicit a low response rate amongst authors of RCTs. Discussion: Following analysis of the themes that emerged from the questionnaires, the main recommendations to improve reporting quality are: journals need to endorse, adhere and promote reporting guidelines, a methodologist could review methodological details of publications simultaneously to peer review, envelopes as a form of allocation concealment are poorly implemented and reported, so careful review of these is required, funders need to insist on more robust allocation concealment methods are employed if the RCT setting allows, and authors need to acknowledge their responsibility for transparent reporting of RCTs.

This study ascertains whether a composite corporate governance (CCG) index is related to the sustainability reporting quality of listed banks in Nigeria. We posit that, for a company to report adequately on sustainability initiatives, there must be a strong corporate governance mechanism. Using a balanced set of panel data with 190 observations from 19 quoted banks for a period of ten years (2012–2021), this study investigates the relationship between the corporate governance index and sustainability reporting quality. Categorical data were obtained using a scale of 0–6 and dichotomous data were obtained using a binary dummy. Our results show that corporate governance mechanisms have a statistically significant influence on the quality of sustainability reporting. We establish that banks with diluted ownership, greater board independence, a high level of audit committee financial expertise, and greater shareholder rights and protection are likely to have higher SRQ. Our results provide empirical support for resource-based theory which emphasizes the internal capabilities of a firm as a source of competitive advantage. In this context, effective CG can be a strategic resource that will help position the firm for sustainable performance. This study highlights the corporate governance mechanisms that banks should focus on towards achieve quality sustainability reporting, which includes diluted ownership, board independence, financial expertise in the audit committee, board diversity, shareholders’ rights, and protection. In addition, it establishes that adequate sustainability practices enhance stakeholders’ confidence in the performance of listed companies.

We propose a new measure of accounting reporting complexity (ARC) based on the count of accounting items (XBRL tags) disclosed in 10-K filings. The preparation and disclosure of more accounting items is complicated because it requires greater knowledge of authoritative accounting standards. This aspect of complexity can increase the likelihood of mistakes, incorrect application of GAAP, and can ultimately lead to less credible financial reports. Consistently, we find that ARC is associated with a greater likelihood of misstatements and material weakness disclosures, longer audit delay, and higher audit fees. In comparison to commonly used measures of operating and linguistic complexity, the associations between ARC and these outcomes are more consistent, exhibit greater explanatory power, and have stronger economic significance. These and additional validation and robustness tests suggest that ARC more completely reflects accounting complexity. In addition, ARC exhibits several advantageous properties, including across- and within-firm variation, availability for the universe of SEC filers, and a direct connection to accounting, inherent in its derivation from detailed accounting disclosures. Finally, because it relies on a comprehensive set of detailed accounting data, ARC broadly captures accounting complexity, while, at the same time, it can be disaggregated into account-specific measures of complexity.

Researchers frequently proxy for managers' non-GAAP disclosures using performance metrics available through analyst forecast data providers (FDPs), such as I/B/E/S. The extent to which FDP-provided earnings are a valid proxy for managers' non-GAAP reporting, however, has been debated extensively. We explore this important question by creating the first large-sample data set of managers' non-GAAP earnings disclosures, which we directly compare to I/B/E/S data. Although we find a substantial overlap between the two data sets, we also find that they differ in systematic ways because I/B/E/S (1) excludes managers' lower quality non-GAAP numbers and (2) sometimes provides higher quality non-GAAP measures that managers do not explicitly disclose. Our results indicate that using I/B/E/S to identify managers' non-GAAP disclosures significantly underestimates the aggressiveness of their reporting choices. We encourage researchers interested in managers' non-GAAP reporting to use our newly available data set of manager-disclosed non-GAAP metrics because it more accurately captures managers' reporting choices.

PurposeThis study reviews research that examines economic and behavioural consequences of CSR reporting regulations. Specifically, the authors evaluate the impact of CSR reporting regulations on (1) reporting quality, (2) capital-markets and (3) firm behaviour.Design/methodology/approachThe authors first describe the stated objectives and enforcement level of CSR reporting regulations around the world. Second, the authors review over 130 archival studies in accounting, finance, economics, law and management that examine consequences of the regulations.FindingsThe stated objectives and enforcement of CSR reporting regulations vary considerably across countries. Empirical research finds no significant changes in reporting quality and generally concludes that CSR reporting continues to be ceremonial rather than substantive after the regulations – consistent with corporate legitimation and “greenwashing” views. In contrast, growing evidence shows both positive and negative capital-market and real effects of the regulations. Overall, the findings from this review indicate that, on balance, there remains a significant number of questions on the net effects of CSR reporting regulations.Originality/valueThe authors offer a comprehensive review of the literature examining consequences of CSR reporting regulations. The authors identify apparent tensions in studies assessing different outcomes after the regulations: between symbolic reporting and positive capital-market outcomes; between profitability and CSR; and between CSR and the welfare of non-shareholder groups. Additionally, we highlight differences in the scope and stated objectives of CSR regulations across countries, with the regulations often reflecting socio-economic development and national interests of implementing countries. Collectively, our review indicates that institutional details are crucial when considering the design or consequences of CSR reporting regulations and/or standards.

To compare the methodological and reporting quality of systematic reviews by authors from China and those from the United States (USA). From systematic reviews of randomized trials published in 2014 in English, we randomly selected 100 from China and 100 from the USA. The methodological quality was assessed using the Assessing the Methodological Quality of Systematic Reviews (AMSTAR) tool, and reporting quality assessed using the Preferred Reporting Items for Systematic Reviews and Meta-analyses (PRISMA) tool. Compared with systematic reviews from the USA, those from China were more likely to be a meta-analysis, published in low-impact journals, and a non-Cochrane review. The mean summary Assessing the Methodological Quality of Systematic Reviews score was 6.7 (95% confidence interval: 6.5, 7.0) for reviews from China and 6.6 (6.1, 7.1) for reviews from the USA, and the mean summary Preferred Reporting Items for Systematic Reviews and Meta-analyses score was 21.2 (20.7, 21.6) for reviews from China and 20.6 (19.9, 21.3) for reviews from the USA. The differences in summary quality scores between China and the USA were statistically nonsignificant after adjusting for multiple review factors. The overall methodological and reporting quality of systematic reviews by authors from China are similar to those from the USA, although the quality of systematic reviews from both countries could be further improved.

Companies disclosing nonfinancial information through sustainability reporting practices provide markets with data on their social, environmental, and governance performance. The quality of sustainability reporting is much discussed in the literature because this quality affects factors such as the credibility of accountability and building stakeholders’ trust in the company. Nonetheless, the concept of quality is multidimensional, and empirical evidence relating to the quality of sustainability reporting presents different findings. Regulations on mandatory nonfinancial disclosure (NFD) open new perspectives for research on sustainability reporting quality (SRQ). This study explored the effect of introducing mandatory NFD on SRQ by focusing on the effects of new legislation (Directive 2014/95/EU) introduced in Italy and Germany. The analysis was conducted through qualitative content analysis of the sustainability reporting practices of Italian and German companies in the top lists of stock exchanges. Sustainability reporting practices of one year before (2016) and one year after (2017) the implementation of Directive 2014/95/EU were compared. The results of 132 observations demonstrated that the quality of sustainability reporting increased after implementation of the law on mandatory NFD. Further, the effect of the law seemed to reduce the differences in SRQ of the two countries before the introduction of mandatory NFD. The results suggested that obligatoriness of NFD affects SRQ together with other relevant determinants focused on by previous research (e.g., company size and industry type).

We investigate the effect of CFO narcissism, as measured by signature size, on financial reporting quality. Experimentally, we validate that narcissism predicts misreporting behavior, and that signature size predicts misreporting through its association with narcissism. Empirically, we examine notarized CFO signatures and find CFO narcissism is associated with more earnings management, less timely loss recognition, weaker internal control quality, and a higher probability of restatements. The results are consistent for within-firm comparisons focusing on CFO changes and are robust to controlling for CFO overconfidence and CEO narcissism. The results highlight the importance of CFO characteristics in the domain of financial reporting decisions.