The Role of Cybersecurity Risk Disclosures in Influencing Stakeholder Intentions and the Moderating Role of Privacy Concern

Regulators have urged companies to enhance the informativeness of cybersecurity risk disclosures in financial statements. However, little is known about how the perceived attributes of cybersecurity risk disclosures may influence various stakeholders\u27 attitudes and behavioral intentions. Drawing on the Belief Reinforcement Model (BRM) and Elaboration Likelihood Model (ELM), this study examines how privacy concern moderates the role of the perceived presence of specificity and the belief about the verifiability of cybersecurity risk disclosures on trust violation and the behavioral intentions of different stakeholders (i.e., users, investors, and employees). The evidence from our experiment suggests that the perceived presence of specific disclosure elements and the belief about disclosure verifiability influences the behavioral intentions for all three stakeholders through beliefs and attitudes. Further, those influences vary depending on the level of individuals\u27 privacy concerns. Keywords Cybersecurity; Elaboration Likelihood Model (ELM); Trust Violation; Data Breach; Belief Reinforcement Model (BRM); Disclosure; Specificity; Stakeholders; Ability-Based Trust

Impairment of Assets or Impairment of Financial Information?

This paper begins with overviews of the Statements of Financial Accounting Standards (SFAS) No. 144 and No. 142 as they pertain to impairments. Subsequent to the overviews, a conceptual evaluation considers how the impairment standards are related to various components of the conceptual framework, including reliability, relevance, and various components within and related to these two characteristics. Incorporated into the discussion is SFAS No. 157 and current fair value measurements in accounting. Controversies surrounding SFAS No. 144 and No. 142 are discussed and companies that have incurred impairment losses or conduct impairment testing on a regular basis are presented. All components of this paper are directed to an analysis of the costs and benefits of impairment testing and the possible result of the trade-off

Fair Value of Real Estate and Utility of Financial Statements of Construction Companies

Some international standards have proposed that the fair value approach should be used to evaluate real estate assets. The choice to use this method or another approach could influence the quality of the financial reports published in response to information demands by company stakeholders. In this study, we will examine whether fair value evaluation, in the real estate context, improves the utility of construction company financial reports. For this purpose, we have addressed a questionnaire to financial directors that concern the relevance, reliability and viability of this valuation criterion. Based on the opinion of the respondents, our results show that the fair value model would improve the usefulness of financial reports to evaluate company solvency, and would also improve the comparability, timeliness and understandability of such reports.

Misstatement verifiability and managers’ earnings warning decisions

We examine whether the verifiability of misstatements in prior forward-looking earnings disclosures contributes to managers’ decisions to issue earnings warnings. Using securities class action lawsuits from 1996 to 2019 pertaining to forward-looking earnings disclosures, we find that earnings warnings are positively associated with the verifiability of misstatements in such disclosures. The results survive entropy balancing and firm-fixed effects to mitigate endogeneity concerns. The positive relation between earnings warnings and misstatement verifiability is more pronounced for firms 1) with a general counsel in the top management team and 2) that face higher ex-ante litigation risk, and less pronounced for firms whose managers engaged in insider selling during the class action lawsuit period. We also show that earnings warnings help to increase the likelihood of a lawsuit dismissal (i.e., lowering litigation costs) when the lawsuit involves misstatements that are more (rather than less) verifiable. Taken together, our findings suggest that managers issue earnings warnings when it helps to reduce litigation costs, consistent with the notion that managers can achieve a greater reduction in litigation costs by issuing earnings warnings.</p

The Financial Reporting Quality for Commercial Banks - Empirical Evidence in Vietnam

Purpose: The financial reporting quality for enterprises in general and commercial banks in Vietnam in particular plays a very important role because it is used by many stakeholders (internal and external) to make relevant decisions. In this study, the author assessed the current status of financial reporting quality for Vietnamese commercial banks through the qualitative characteristics of financial statements.   Theoretical framework: In this study, the author assessed the current status of financial reporting quality for Vietnamese commercial banks through the qualitative characteristics of financial statements according to IASB 2018 including 2 fundamental characteristics including relevance and faithful presentation, 4 enhancing characteristics including understandability, comparability, verifiability, and timeliness.  Design/Methodology: The author used a set of measures on the qualitative characteristics of financial statements according to some previous studies in the world. The author collected data from the financial statements from 24 commercial banks in the period of 2019 - 2021. Findings: The research results show that financial reporting quality for Vietnamese commercial banks is not high. Specifically, for the financial reporting quality characteristics according to IASB (2018), the timeliness characteristics were assessed to have the highest value, followed by understandability characteristics. The two enhancing characteristics including relevance and faithful representation of the financial statements for Vietnamese commercial banks were rated as low. The remaining two enhancing characteristics which were the understandability and verifiability characteristics were also rated as low.   Research, Practical &amp; Social implication: The study shows The financial reporting quality for enterprises in general and commercial banks in Vietnam in particular plays a very important role because it is used by many stakeholders (internal and external) to make relevant decisions.     Originality/ value: The research results will be a useful reference for relevant stakeholders such as the Ministry of Finance, the State Bank of Vietnam, bank managers, shareholders, investors, etc. in management and other related fields

Reactions to reading “Remaining consistent with method? An analysis of grounded theory research in accounting”: A comment on Gurd.

Purpose: The present paper is a comment on Gurd’s paper published in QRAM on the use of grounded theory in interpretive accounting research. Methodology: Like Gurd, we conducted a bibliographic study on prior pieces of research claiming the use of grounded theory. Findings: We found a large diversity of ways of doing grounded theory. There are as many ways as articles. Consistent with the spirit of grounded theory, the field suggested the research questions, methods and verifiability criteria. From the same sample as Gurd, we arrived at different conclusions. Research limitations: In our research, we did not verify the consistency of claims with grounded theory. We took for granted that they had understood and made operational the suggestions of the founders of the method. Practical implications: The four canons of grounded theory can be considered as reference marks rather than as the rules of the method. Accordingly, the researcher is free to develop his own techniques and procedures. Originality/Value of the paper: This paper stimulates debates on grounded theory based research. On the other hand, it conveys the richness and the variety of interpretive research. Two similar studies, using similar samples and methods arrive at different (divergent) conclusions.interpretive research; grounded theory;

Reactions to reading “Remaining consistent with method? An analysis of grounded theory research in accounting”: A comment on Gurd

Purpose: The present paper is a comment on Gurd's paper published in QRAM on the use of grounded theory in interpretive accounting research. Methodology: Like Gurd, we conducted a bibliographic study on prior pieces of research claiming the use of grounded theory. Findings: We found a large diversity of ways of doing grounded theory. There are as many ways as articles. Consistent with the spirit of grounded theory, the field suggested the research questions, methods and verifiability criteria. From the same sample as Gurd, we arrived at different conclusions. Research limitations: In our research, we did not verify the consistency of claims with grounded theory. We took for granted that they had understood and made operational the suggestions of the founders of the method. Practical implications: The four canons of grounded theory can be considered as reference marks rather than as the rules of the method. Accordingly, the researcher is free to develop his own techniques and procedures. Originality/Value of the paper: This paper stimulates debates on grounded theory based research. On the other hand, it conveys the richness and the variety of interpretive research. Two similar studies, using similar samples and methods arrive at different (divergent) conclusions.grounded theory, interpretive research

The Role of Disclosure Specificity in Mitigating Trust Violation After a Data Breach: A Multiple Stakeholder Approach

Regulators and standard setters have urged companies to enhance the informativeness of cybersecurity risk disclosures in financial statements. Managers also have the incentive to restore public trust in their ability through quality cybersecurity risk disclosures following a data breach. However, little is known about how cybersecurity risk disclosures may influence various stakeholders\u27 attitudes and behavior. This study examines how the perceived presence of specificity of cybersecurity risk disclosures influences the behavioral intentions of different stakeholders (i.e., investors, users, and employees) through beliefs and attitudes. Additionally, the study examines and contrasts the role of two different types of ability-based trust (i.e., trust in protecting data, and trust in conducting transactions) that impact stakeholder intentions differently. The evidence from our experiment suggests that the perceived presence of specific disclosure elements influences behavior and intentions (for all three stakeholders, users, investors, and employees) through beliefs and attitudes

The Role of Disclosure Specificity in Mitigating Trust Violation After a Data Breach: A Multiple Stakeholder Approach

Regulators and standard setters have urged companies to enhance the informativeness of cybersecurity risk disclosures in financial statements. Managers also have the incentive to restore public trust in their ability through quality cybersecurity risk disclosures following a data breach. However, little is known about how cybersecurity risk disclosures may influence various stakeholders\u27 attitudes and behavior. This study examines how the perceived presence of specificity of cybersecurity risk disclosures influences the behavioral intentions of different stakeholders (i.e., investors, users, and employees) through beliefs and attitudes. Additionally, the study examines and contrasts the role of two different types of ability-based trust (i.e., trust in protecting data, and trust in conducting transactions) that impact stakeholder intentions differently. The evidence from our experiment suggests that the perceived presence of specific disclosure elements influences behavior and intentions (for all three stakeholders, users, investors, and employees) through beliefs and attitudes