Detection Model of Legally Registered Mafia Firms in Italy

This paper develops a model that can contribute to the detection of legally registered firms defined as Mafia firms (LMFs) due to having been confiscated by judicial authorities, in relation to alleged connections of their owners with Italian organized crime. The model correctly classifies 76.41% of firms within a matched sample of 852 firm-years including LMFs and lawful firms. Furthermore, we present an analysis of financial statement characteristics of singular private firms which are socially irresponsible by nature and whose incentives, modus operandi and legal financial statement formats differ from those of listed companies. In particular, we show that specific accruals and earnings management proxies may provide more insight into accounting manipulation patterns of LMFs. More importantly, our paper can help practitioners and regulators identify accounting signals that can be used in risk assessment models or in the detection of criminal infiltrations and related illicit practices

Learning by Doing? Partners' Audit Experience and the Quality of Audit Services

Despite evidence suggesting that specialised knowledge should be more relevant than generic knowledge to explain different levels of audit quality across individual auditors, no study to date has addressed the respective impacts of the industry-specific and the generic audit experience of audit partners on the quality of audit services. Our study investigates this issue in the Spanish audit market. We proxy audit quality by discretionary accruals and by the opinion of the audit report, and differentiate among client-specific experience, industry-specific experience and generic audit experience of individual auditors. As expected, our results show significantly higher audit quality when the client is audited by a partner with stronger industry-specific audit experience. Furthermore, we observe that neither client-specific experience nor generic audit experience of audit partners are significant determinants of the quality of audit services provided by these auditors. These results may have some interesting implications for audit firms. Therefore, whereas some prior studies on the related issue of industry specialization point out that specialised knowledge is more relevant than generic knowledge to explain the quality of audit services, our findings suggest that specialised knowledge is, in fact, the only type of knowledge that seems to matter

CEO demographics and gender diversity in senior management in large Scandinavian firms

Purpose This study aims to investigate whether chief executive officer (CEO) demographics are associated with gender diversity in senior management in the Scandinavia region. Design/methodology/approach The research design draws on multivariate cross-sectional analysis. The demographic characteristics examined are gender, age and education. A total of six hypotheses are developed and tested. The sample includes the largest 106 public firms from Denmark, Finland, Norway and Sweden. Findings Results show that firms with female CEOs have more women in senior management than other firms. However, neither age nor level of formal education of CEOs shows significant results, with the exception of CEOs holding MBA degrees, who are associated with fewer women in these positions. Interestingly, the association between educational background and gender diversity is principally driven by study-abroad experiences. Finally, results show that gender diversity in senior management has an important country component, whereas the industry component is negligible. Originality/value The relationship between managers’ demographics and gender diversity among subordinates is a relatively unexplored research issue, as previous works have focused on general comparisons between male and female managers. Furthermore, the Scandinavian context is particularly interesting as this region leads gender equality rankings

Exploring the relationship between CEO characteristics and performance

This article examines the relationship between CEO characteristics and firm performance with a sample formed by the best performing CEOs in the world according to Harvard Business Review. The empirical analysis is based on descriptive statistics techniques and studies the universe of CEOs included in the 2016 ranking "The Best-Performing CEOs in the World" released by Harvard Business Review. Moreover, it addresses performance at various levels: financial performance, environmental, social and governance performance (ESG) and overall performance. The findings of the study show: 1) a strongly negative association between financial and ESG performance; 2) outsider CEOs outperform insider CEOs in overall performance; 3) CEOs with engineering degrees show significantly higher ESG performance; 4) CEOs with longer tenures in the firm present stronger financial performance though weaker ESG performance; and 5) the CEO's country of origin emerges as an important driver to explain the different types of performance. Results in this field contradict the conventional wisdom of Anglo-Saxon CEOs as the best performers CEOs

Cost behavior in e-commerce firms

We conduct empirical research on the flexibility of operating costs of e-commerce firms. With an international sample of firms from different European countries, we find that e-commerce firms have a different cost structure than traditional retail firms, with a lower share of labor costs and cost of goods sold, but a higher share of other operating costs. While we find no significant different behavior in cost of goods sold and labor costs between the two types of firms, e-commerce firms are more flexible in adjusting other operating costs than traditional retail firms when activity decreases. Results are robust to different models, estimations methods and samples. The higher flexibility of e-commerce firms relies on other operating costs, but e-commerce creates qualified jobs with higher wages than traditional retail, with no additional exposure to labor uncertainty for employees

A critical approach to the evaluation of the quality of accounting research in the Spanish university system and its implications

Este trabajo analiza la conveniencia y consecuencias de los criterios de evaluación de la actividad investigadora en contabilidad establecidos por ANECA, concretándonos en los criterios para la acreditación de catedrático de universidad, así como el patrón y posibilidades de publicación de los académicos contables en España, Europa y a nivel mundial. Encontramos que los académicos del área contable tienen unas dificultades para publicar que son substancialmente superiores a las de los académicos de otras áreas de empresa. La mayor parte de los académicos afiliados a instituciones españolas que consiguen publicar en las principales revistas académicas contables recurren a co-autorías, principalmente estadounidenses y británicas, y a focalizar el contenido de sus trabajos en contextos y problemáticas no españolas. La normativa española de acreditación acentúa este comportamiento. Esta situación puede tener graves implicaciones para la supervivencia del área de conocimiento, el tratamiento de las temáticas y problemáticas específicamente ligadas al contexto español

Audit firm tenure and audit quality: A cross-European study

Directive 2014/56/EU and Regulation (EU) No. 537/2014, which came into effect in June 2016, introduced the mandatory rotation of audit firms after a maximum period of 10 years with the same client. We conduct a cross‐European study with the aim of assessing whether long audit firm tenures are associated with lower levels of audit quality. The sample for the study is based on the constituents of the Standard & Poor's Europe 350 index for the years between 2009 and 2016, and we utilize three different sets of proxies for audit quality: discretionary accruals, differences between reported earnings and earnings benchmarks, and accounting restatements. The main result of the study finds that companies with more than 10 years of tenure with their auditors do not have a lower audit quality than other firms. In fact, this study provides some evidence of a higher audit quality for these firms. The results are robust to various checks. Therefore, if there does not seem to be a problem of a lack of audit quality associated with long audit firm tenures, the necessity of establishing a maximum tenure, as the new European regulation does, may be questioned

Is there a gender effect on the quality of audit services?

Should we expect a gender effect on the quality of audit services? Both the behavioural economics literature and the glass ceiling for women in the audit profession suggest an affirmative answer to this question. We conduct the study with a sample of Spanish-listed companies for the period between 2008 and 2015 and use the quality of the client's financial statements as a proxy for the quality of audit services. The results provide sound and consistent support for a positive female auditor effect on the quality of audit services. Although our figures suggest that men and women tend to audit different types of clients, the results are not driven by these differences. Moreover, the gender effect occurs from the very first year of the appointment of a female partner to replace a male auditor. This study may contribute to challenging stereotypes and may be informative for the ongoing political debate regarding the under-representation of women in senior management levels

Legality rating and corporate efficiency: evidence from a conditional nonparametric frontier analysis

Promoting legality and productivity is a central issue in modern economies. In this paper, we investigate the implications of a public policy that aims at achieving these goals through the adoption of the so-called legality rating (LR). The latter reduces corporate risk uncertainty by abating asymmetric information between companies that use good legal, fiscal and ethical practices and the credit system. We match companies whose legal and ethical practices have been certified by the Italian government-through the assignment of the LR-with a sample of unrated firms, and apply recent advances in nonparametric frontier analysis to assess the economic performance. We highlight a positive relationship between legality rating and firms' production efficiency. Our findings also show that legality rating policy is an effective tool to enhance inter-regional technological catching-up of businesses

COVID-19 Communication Management on Facebook Pages of Local Governments

We examine how Italian municipalities manage COVID-19 communication on their official Facebook pages. For this purpose, we apply an automatic topic modeling procedure on a sample of 76,139 posts published on the official Facebook pages of 103 Italian provincial capital municipalities from 1 March 2020 to 26 March 2021 of the COVID-19 pandemic period. We identify two topics related to COVID-19 consisting of restrictive measures and support measures. Using regression models with municipality and year-week fixed effects, we find that the prevalence of the topic on COVID-19 restrictive measures negatively affects the tone of the communication, computed through a sentiment analysis procedure, and it is negatively associated with the number of COVID-19 positive cases in the municipal area. In contrast, the prevalence of the topic on COVID-19 support measures positively affects the tone of the communication and it is positively associated with the number of positive cases. These associations are moderated by ideology, age, and political incentives of incumbent mayors. These results may reveal a strategic communication of municipalities to induce positive perceptions about the performance of municipal incumbents in responding to the pandemic and, therefore, enhance political consensus among voters. Finally, these findings may have practical implications for public regulators, public managers, and other followers of local governments on social media