The economic determinants of conditional conservatism.

We study the economic determinants of conditional conservatism. Consistent with prior literature, we find that contracting induces only conditional conservatism and litigation induces both conditional and unconditional conservatism. We extend prior evidence by Qiang (2007) by showing that taxation and regulation induce not only unconditional conservatism, but conditional conservatism as well. We show that in certain scenarios taxation and regulation create incentives to shift income from periods with high taxation pressure and high public scrutiny to periods with lower taxation pressure and lower public scrutiny. These income shifting strategies are implemented by recognising current economic losses that, given managerial incentives to report aggressively, would not have been recognized otherwise, or by delaying the recognition of current economic gains that would have been recognized had circumstances been different.Conservatism; Contracting; Taxation; Political costs; Litigation risk;

The effect of earnings management on the asymmetric timeliness of earnings.

Is earnings management affecting (driving) the measures of earnings conservatism?Ball et al. (2000) point out that the asymmetry in the recognition of good and bad news in earnings (faster recognition of bad news: earnings conservatism) is more pronounced in common‐law than in code‐law based accounting regimes. However, comparative studies on earnings conservatism in Europe have failed to identify significant differences between common‐law and code‐law based countries. We argue that in code‐law based countries managers have incentives to reduce earnings consistently. This enhances the association between earnings and returns in bad news periods. We find that after controlling for discretionary accruals, the differential earnings response to bad news in Germany and France decreases significantly.Conservatism; Earnings management; Europe; Comparability;

Board of directors' characteristics and conditional accounting conservatism : Spanish evidence.

Using a sample of Spanish listed firms for the period 1997-2002 we find that firms where the CEO has low influence over the functioning of the board of directors show a greater degree of accounting conservatism. We measure the influence of the CEO over the board of directors using two aggregate indexes combining 6 (8) characteristics of the functioning of the board of directors and its monitoring committees: board size, proportion of non-executive directors, proportion of independent directors, whether the chairman of the board is an executive director, the number of board meetings, and the existence of an audit committee, a nomination/remuneration committee and an executive committee. We define conservatism as the asymmetric recognition speed of good and bad news in earnings, and we measure it following Basu (1997) and Ball and Shivakumar (2005). Our results are robust to alternative specifications and specific controls for investment opportunities and for the endogenous nature of corporate governance and earnings quality. Overall, our evidence shows that firms with strong boards use conservative accounting numbers as a governance tool, even in an institutional setting with low litigation risk such as SpainConservatism; Governance; CEO; Board of Directors; Earnings Timeliness; Spain;

Earnings quality in ex-post failed firms.

This paper analyses earnings quality in ex-post failed firms. Using a large sample of UK bankrupt firms, we find that failed firms manage earnings upwards in the four years prior to failure. This manipulation is achieved in two ways: (1) through accounting (accruals) manipulation; and (2) by implementing real operating actions that deviate from normal practice. We show that these two types of manipulation lead to reduced earnings reliability. We use conditional conservatism as a proxy for reliability, as prior literature links conditional accounting conservatism to better governance and positive economic outcomes. Our results show that conditional conservatism decreases substantially in the years prior to failure. Finally, we show that accruals manipulation is more pronounced in ex-post bankrupt firms with low ex-ante probability of failure, and that ex-post bankrupt firms with high ex-ante failure probability, having likely exhausted the opportunities for accrual manipulation, manipulate real operations more aggressivelyFirm failure; Accruals management; Real earnings management; Conditional conservatism; Earnings quality; Bankruptcy;

Accounting conservatism and corporate governance.

We predict that firms with stronger corporate governance will exhibit a higher degree of accounting conservatism. Governance level is assessed using a composite measure that incorporates several internal and external characteristics. Consistent with our prediction, strong governance firms show significantly higher levels of conditional accounting conservatism. Our tests take into account the endogenous nature of corporate governance, and the results are robust to the use of several measures of conservatism (market-based and nonmarket-based). Our evidence is consistent with the direction of causality flowing from governance to conservatism, and not vice versa, indicating that governance and conservatism are not substitutes. Finally, we study the impact of earnings discretion on the sensitivity of earnings to bad news across governance structures. We find that, on average, strong-governance firms appear to use discretionary accruals to inform investors about bad news in a timelier mannerConditional conservatism; Corporate governance; Managerial discretion;

Conditional conservatism and cost of capital.

We empirically test the association between conditional conservatism and cost of equity capital. Conditional conservatism imposes stronger verification requirements for the recognition of economic gains than economic losses, resulting in earnings that reflect losses faster than gains. This asymmetric reporting of gains and losses is predicted to lower firm cost of equity capital by increasing bad news reporting precision, thereby reducing information uncertainty (Guay and Verrecchia 2007) and the volatility of future stock prices (Suijs 2008). Using standard asset-pricing tests, we find a significant negative relation between conditional conservatism and excess average stock returns over the period 1975-2003. This evidence is corroborated by further tests on the association between conditional conservatism and measures of implied cost of capital derived from analysts’ forecasts.Conditional conservatism; Asymmetric reporting; Cost of capital; Information precision; Uncertainty;

Maturing the Old: Sophie's Journey towards Self-Recognition in Howl's Moving Castle by Diana Wynne Jones

The proliferation of the Children’s Literature novels by Diana Wynne Jones has converted her into a prominent figure in the fantastic genre. Although several scholars have researched diverse aspects of Jones’s narratives, there may still be approaches to adopt. Thus, the aim of this dissertation is to analyse the book Howl’s Moving Castle (1986) by the abovementioned author and examine the protagonist Sophie’s transition from having a self-imposed personality to finding her true identity. To that end, we will firstly examine the biography of the author. Secondly, we will briefly explain the categorisation of Fantasy, followed by a contextualisation of this literary genre in the second half of the 20th century in comparison with Jones’s own standpoint as an avant-garde writer. Thirdly, we will focus on the aforesaid novel in relation to the importance of names, the opposition of fate and free will, and finally, Sophie’s search of her original identity. Lastly, we will provide a summary of the main conclusions we have previously come to regarding the entire journey

Empowerment in the Public Sector: Testing the Influence of Goal Orientation

Empowerment has emerged as an important new issue in the public sector organization setting in the wake of mainstream new public management (NPM). Nevertheless, few studies in this frame have combined structural (managerial) and psychological (individual) approaches in an integrative study of empowerment. There is also a need to examine the moderating variables involved in this relationship, as well as to extend research on work motivation in public management. This study explores the effect of structural empowerment on psychological empowerment, and it also draws on goal orientation (GO) theory to examine the moderating role of employees’ GO in this link. The model is tested on a sample of 521 Spanish local authority employees. The results do not confirm the direct link between structural and psychological empowerment, but show that learning GO has considerable moderating power in this relationship, and its interaction with structural empowerment affects employees’ psychological empowerment levels

Effects of database choice on international accounting research.

Data availability is one of the traditional obstacles confronting researchers carrying out international empirical studies in accounting. In recent years several databases have claimed to offer comprehensive coverage of accounting and financial data of firms worldwide. We analyse whether the choice of database has an effect on the results of empirical studies. We find that the results of a simple empirical adaptation of the Ohlson (1995) model for fourteen member states of the European Union change significantly depending on the database chosen (Datastream, Global Vantage, Company Analysis, Worldscope, Thomson Financial, Financials and BvD Osiris). These differences are mainly attributable to differences in the samples across databases. When we match observations across all databases the differences persist but are much less pronounced. Our main conclusion is that database choice matters, as it leads to different results when the same research design is used.Database comparability; International empirical research;

New methodology in bibliometrics using Altmetrics

Postprint (author's final draft