15 research outputs found
MANDATING DISCLOSURE OF R&D BENEFITS AND COSTS TO EXTRACT MANAGERS' PRIVATE INFORMATION: OBSTACLES AND PRACTICAL CONSIDERATIONS
This study suggests that mandating managers to disclose information about the net benefit of R&D outside financial statements is worth to be considered as one potential approach to improve the market's valuation of R&D and to improve managers' R&D-related decision making process. A transition of the R&D reporting practice from cost focused to net benefit focused is viewed necessary. A stream of two mandatory reporting systems is established for the transition to take place more smoothly. It is expected that information asymmetry can be reduced after information about R&D net benefit becomes publicly available. This study contributes to the literature in three ways. First, this is the first study which seriously considers the direct disclosure of net benefit of R&D as a way to improve the R&D reporting practice. Second, this study proposes a stream of reporting systems in the transition. The current R&D reporting practice can be transited gradually toward the desirable R&D reporting practice following the stream. Finally, this study points out that both market participants and firms will be potentially benefited in the transition. Not only the negative impact of information asymmetry will be reduced but also some potential subsidiary benefits will be provided by the transition
Determinants and market valuation of the decision to audit or review: Evidence from Taiwan
Using observations of public companies in Taiwan between 2008 and 2012, this study examines the determinants of demand for different assurance services from the perspectives of agency cost, information need, and quality of corporate governance. Our results indicate that the demand for audit assurance is higher in the presence of higher agency costs between controlling and non-controlling shareholders and higher agency costs of debts. We also find that companies with stronger capital need are more likely to have their interim financial statements audited. The quality of corporate governance is found to have a positive effect on the decision to choose audit assurance. Finally, our empirical results demonstrate audited information is more value relevant than reviewed information. This suggests that firms can potentially enjoy benefits from audited information as the market will rely more on their financial information in making investment-related decisions
The effects of IFRS experience on audit fees for listed companies in China
Purpose - The purpose of this paper is to examine whether and how auditors\u27 and audit clients\u27 IFRS-related experience alters auditors\u27 pricing decisions in the initial years of IFRS adoption in China. Design/methodology/approach - The authors conduct the analysis by examining audit fees from 4,129 sample observations that issued A-shares in the Shanghai and Shenzhen stock exchanges from 2005 to 2008. The authors empirically test the association between audit premiums and auditors\u27 and auditees\u27 IFRS experience. Findings - The authors find that auditors with IFRS experience charged significantly higher audit premiums in the initial years of IFRS adoption. The authors also find that audit clients\u27 with IFRS experience paid significantly lower incremental fees. The authors further find that the increased fees charged by audit firms with IFRS experience are independent of the degree of changes in the financial reporting complexity of their clients. In contrast, audit clients with IFRS experience paid lower incremental fees only when they underwent a high degree of changes in financial reporting complexity. Originality/value - First, it is the understanding that this study is the first to provide evidence on the effect of audit clients\u27 experience on audit fees. Second, the measure of auditors\u27 expertise is independent of audit clients\u27 decisions and is a less noisy measure. Third, the findings complement the existing evidence from other countries regarding the effects of IFRS convergence on audit fees. Finally, this study empirically tests the effects of changes in financial reporting complexity on audit fees
Auditor sanctions and the management of riskiness of audit client portfolios
This study examines the effect of auditor sanctions imposed on the riskiness of auditorsā client portfolios. We identify auditors/audit firms that were subject to disciplinary actions by the China Securities Regulatory Commission (CSRC) and empirically examine the change in the riskiness of their client portfolios after the sanctions were imposed. The empirical results suggest a decrease in the overall clientele financial risk, measured by both aggregate bankruptcy measures and individual financial risk measures, after enforcement releases were issued. Moreover, we find that the decrease in client portfoliosā risk is greater when a disciplinary action is imposed in the period of higher legal liability than when it is imposed in the period of lower legal liability. This study contributes to prior studies on the effects of audit failure on auditorsā behaviour by examining the association between auditor sanctions and the management of audit client portfolios risk
The association between pro forma earnings and earnings management
Purpose ā The purpose of this paper is to examine the association between investor perception management through reporting aggressive pro forma (PF) earnings and earnings management through real activities or by manipulating accruals. Design/methodology/approach ā A sample of PF earnings announcements over 2001-2007 was manually collected from Lexis Nexis, consisting of 4,285 firm-quarter observations; the aggressiveness of PF earnings reporting was measured by the difference between GAAP earnings and PF earnings. Findings ā The paper finds that managers report more aggressively calculated PF earnings numbers if they do not meet their earnings targets or they have limited abilities to manage earnings. Also it was found that the gap between the value relevance of GAAP earnings and PF earnings is smaller for firms with relatively low level of discretionary accruals; this gap is decreased in the post-Sarbanes Oxley Act period. Practical implications ā This paper has implications for investors and financial analysts by explaining firms' PF earnings reporting behaviours. It also has policy implications for capital market regulators regarding the PF earnings reporting rules. Originality/value ā This paper is the first study to provide evidence that the opportunistic reporting of PF earnings is associated with managerial inability to meet earnings targets through earnings management. It advances our understanding on the PF earnings reporting behaviour.
Effects of translation on probability judgments: Evidence from the IFRS in Taiwan
Following the trend toward a globalized accounting standard, many non-English-speaking countries have adopted the International Financial Reporting Standards (IFRS). Translation of the IFRS from English to other languages is inevitable thus, it is crucial to ensure that the original meanings of the standard requirements are not affected by translation. Using accounting students from a university in Taiwan as participants, we found that nearly half of probability expressions from the IFRS were differently interpreted before and after translation. And the effects of translation were moderated by the participantsā accounting knowledge and English proficiency. Our results show that improving participantsā accounting knowledge or English fluency would reduce variations in interpretations of probability expressions before and after the translation. Finally, we found that translation has more impact on participantsā interpretations of negative expressions than positive expressions
Serum adipocyte fatty acid-binding protein levels in patients with critical illness are associated with insulin resistance and predict mortality
[[abstract]]Introduction
Hyperglycemia and insulin resistance are commonplace in critical illness, especially in patients with sepsis. Recently, several hormones secreted by adipose tissue have been determined to be involved in overall insulin sensitivity in metabolic syndrome-related conditions, including adipocyte fatty-acid binding protein (A-FABP). However, little is known about their roles in critical illness. On the other hand, there is evidence that several adipose tissue gene expressions change in critically ill patients.
Methods
A total of 120 patients (72 with sepsis, 48 without sepsis) were studied prospectively on admission to a medical ICU and compared with 45 healthy volunteers as controls. Various laboratory parameters and metabolic and inflammatory profiles were assessed within 48 hours after admission. Clinical data were collected from medical records.
Results
Compared with healthy controls, serum A-FABP concentrations were higher in all critically ill patients, and there was a trend of higher A-FABP in patients with sepsis. In multivariate correlation analysis in all critically ill patients, the serum A-FABP concentrations were independently related to serum creatinine, fasting plasma glucose, total cholesterol, TNF-alpha, albumin, and the Acute Physiology and Chronic Health Evaluation II scores. In survival analysis, higher A-FABP levels (> 40 ng/ml) were associated with an unfavorable overall survival outcome, especially in sepsis patients.
Conclusions
Critically ill patients have higher serum A-FABP concentrations. Moreover, A-FABP may potentially serve as a prognostic biomarker in critically ill patients with sepsis.[[notice]]č£ę£å®