Financial Reporting Quality and Debt Contracting in Emerging Economy

Muratović-Dedić, Ajla; Serdarevic, Nino

doi:10.6007/ijarafms/v7-i4/3404

Cited by 3 publications

(3 citation statements)

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“…Higher persistence earnings show lower earnings quality and are listed on a descending scale. There is no one accepted way to combine the four earnings qualities, and this study used the standardised average of the aggregate score of the four ranked dimensions to measure the FDQ [51].…”

Section: Plos Onementioning

confidence: 99%

“…Alternative multidimensional financial disclosure quality. The study used the measure suggested by Chen et al [51] as an alternative measure for ascertaining financial disclosure quality, here known as FDQ(C), by computing the three earnings qualities: current accrualbased earnings quality, total accrual-based earnings quality, and discretionary revenue-based earnings quality (Table 5).…”

Section: Robustness Testsmentioning

confidence: 99%

“…Table 6 shows the correlation matrix using the financial disclosure quality method of Chen et al [51]. The VIF is 1.99, with a minimum value of 1.38 and a maximum of 2.48 for individual variables.…”

Section: Robustness Testsmentioning

confidence: 99%

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Financial disclosure quality and sustainability disclosure quality. A case in China

Abeysekera

2021

PLoS ONE

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This paper empirically examines whether there is an association between financial reporting disclosure quality and sustainability disclosure quality of the top 100 socially reputed Chinese listed firms. The paper computed financial disclosure quality by empirically combining earning qualities of accrual, persistence, predictability, and smoothness. Using content analysis and survey questionnaire research methods, it calculated sustainability quality by combining disclosure quantity (through quantitative weightings), disclosure type (through qualitative weightings), and disclosure item importance (through qualitative weightings) of economic, social, and environmental disclosures made in annual and sustainability reports, ascertained using the Global Reporting Initiative sustainability framework. The study finds that sustainability disclosure in the current period is sufficiently associated with financial disclosure quality of the current period and future period. Consistent with stakeholder theory, firms with a social reputation are perceived as trustworthy by stakeholders and shareholders. The findings lead to a cultural stakeholder theory where underlying values of societal culture create a condition supporting mutual stakeholder relationships between firm and various stakeholders. Demonstrating trustworthiness through disclosures can help boost consumer confidence and foreign trade relations for Chinese firms. The Chinese government can design innovative schemes to reward and promote trustworthiness in firms, such as regulating base-point reductions in interest rates on borrowing or raising funds.

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Section: Plos Onementioning

confidence: 99%

Section: Robustness Testsmentioning

confidence: 99%

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Financial disclosure quality and sustainability disclosure quality. A case in China

Abeysekera

2021

PLoS ONE

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Forensic Review of Financial Statements of Legal Entity Tuš-Trade

Isaković-Kaplan

Muratović-Dedić

Demirović

et al. 2021

Journal of Forensic Accounting Profession

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Large corporate scandals in the US and Europe, from the early 21st century, such as Enron, Parmalat, WorldCom and many others, have seriously shaken public confidence in the auditors’ work. Consequently, many countries have recognized the need for introduce the forensic accounting as a more advanced and reliable form of protection against manipulative financial reporting by companies, and have completed the accounting profession with the forensic accountant title, as an active fighter against various types of frauds in companies.

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Financial reporting incentives: Taxation and external financing need

Serdarevic¹,

Muratović-Dedić²

2020

BH Ekonomski forum

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Earnings management literature extensively explores tax regime and debt contracting as possible incentives in financial reporting. Firms engage with aggressive financial reporting to bias earnings in periods when the need for external financing increases. Contrary to this, the tax burden represents incentive for more conservative reporting. We argue that the level of firm's financial reporting aggressiveness is not constant but rather floating from period to period, directly affecting the quality of financial reports. We assume that firm's management on its own discretion determines the level of conservatism, balancing between these two incentives. The prevailing of two incentives, the need for external financing and the tax burden, determines the level of conservatism in particular reporting period. We hypothesised that the reduction in tax burden incentive overcomes the debt contracting incentive in the years of decreasing external financing need, implying more conservative accounting to balance between economic and taxable income. The total accruals are used as a measure of earnings management reflected to working capital accruals. The data analysis conducted on financial reports of 297 firms in the time-series of five years shows a significant correlation between total accruals, external financing needs and difference between economic and taxable income.

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Financial Reporting Quality and Debt Contracting in Emerging Economy

Cited by 3 publications

References 0 publications

Financial disclosure quality and sustainability disclosure quality. A case in China

Financial disclosure quality and sustainability disclosure quality. A case in China

Forensic Review of Financial Statements of Legal Entity Tuš-Trade

Financial reporting incentives: Taxation and external financing need

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