Search results for: corporate earnings management

Authors: Yosra Ben Mhamed

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Most previous research that investigates the importance of earnings volatility for a firm’s value has focused on the effects of earnings volatility on the cost of capital. Many study illustrate that earnings volatility can reduce the firm’s value by enhancing the cost of capital. However, a few recent studies directly examine the relation between earnings volatility and subsequent earnings levels. In our study, we further explore the role of volatility in forecasting. Our study makes two primary contributions to the literature. First, taking into account the level of current firm’s performance, we provide causal theory to the link between volatility and earnings predictability. Nevertheless, previous studies testing the linearity of this relationship have not mentioned any underlying theory. Secondly, our study contributes to the vast body of fundamental analysis research that identifies a set of variables that improve valuation, by showing that earnings volatility affects the estimation of future earnings. Projections of earnings are used by valuation research and practice to derive estimates of firm value. Since we want to examine the impact of volatility on earnings predictability, we sort the sample into three portfolios according to the level of their earnings volatility in ascending order. For each quintile, we present the predictability coefficient. In a second test, each of these portfolios is, then, sorted into three further quintiles based on their level of current earnings. These yield nine quintiles. So we can observe whether volatility strongly predicts decreases on earnings predictability only for highest quintile of earnings. In general, we find that earnings volatility has an inverse relationship with earnings predictability. Our results also show that the sensibility of earnings predictability to ex-ante volatility is more pronounced among profitability firms. The findings are most consistent with overinvestment and persistence explanations.

Keywords: earnings volatility, earnings predictability, earnings persistence, current profitability

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Authors: Achsania Hendratmi, Nisful Laila, Fatin Fadhilah Hasib, Puji Sucia Sukmaningrum

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This study aims to compare and see the differences between Islamic bank in Indonesia and Islamic bank in Malaysia using RGEC method (Risk Profile, Good Corporate Governance, Earnings, and Capital). This study examines the comparison in business and social performance of eleven Islamic banks in Indonesia and fifteen Islamic banks in Malaysia. This research used quantitative approach and the collections of data was done by collecting all the annual reports of banks that has been created as a sample over the period 2011-2015. The test result of the Independent Samples T-test and Mann-Whitney Test showed there were differences in the business performance of Islamic Bank in Indonesia and Malaysia as seen from the aspect of Risk profile (FDR), GCG, and Earnings (ROA). Also, there were differences of business and social performance as seen from Earnings (ROE), Capital (CAR), and Sharia Conformity Indicator (PSR and ZR) aspects.

Keywords: business performance, Islamic banks, RGEC, social performance

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Authors: Mohammad Namazi, Mohammad Sadeghzadeh Maharluie

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Predicting earnings management is vital for the capital market participants, financial analysts and managers. The aim of this research is attempting to respond to this query: Is there a significant difference between the regression model and neural networks’ models in predicting earnings management, and which one leads to a superior prediction of it? In approaching this question, a Linear Regression (LR) model was compared with two neural networks including Multi-Layer Perceptron (MLP), and Generalized Regression Neural Network (GRNN). The population of this study includes 94 listed companies in Tehran Stock Exchange (TSE) market from 2003 to 2011. After the results of all models were acquired, ANOVA was exerted to test the hypotheses. In general, the summary of statistical results showed that the precision of GRNN did not exhibit a significant difference in comparison with MLP. In addition, the mean square error of the MLP and GRNN showed a significant difference with the multi variable LR model. These findings support the notion of nonlinear behavior of the earnings management. Therefore, it is more appropriate for capital market participants to analyze earnings management based upon neural networks techniques, and not to adopt linear regression models.

Keywords: earnings management, generalized linear regression, neural networks multi-layer perceptron, Tehran stock exchange

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Authors: T. Elrazaz

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This paper examines accrual and real earnings management by publicly listed targets around mergers and acquisitions. Prior literature shows that earnings management around mergers and acquisitions can have a significant economic impact because of the associated wealth transfers among stakeholders. More importantly, acting on behalf of their shareholders or pursuing their self-interests, managers of both targets and acquirers may be equally motivated to manipulate earnings prior to an acquisition to generate higher gains for their shareholders or themselves. Building on the grounds of information asymmetry, agency conflicts, stewardship theory, and the revelation principle, this study addresses the question of whether takeover targets employ accrual and real earnings management in the periods prior to the announcement of Mergers and Acquisitions (M&A). Additionally, this study examines whether acquirers are able to detect targets’ earnings management, and in response, adjust the acquisition premium paid in order not to face the risk of overpayment. This study uses an aggregate accruals approach in estimating accrual earnings management as proxied by estimated abnormal accruals. Additionally, real earnings management is proxied for by employing widely used models in accounting and finance literature. The results of this study indicate that takeover targets manipulate their earnings using accruals in the second year with an earnings release prior to the announcement of the M&A. Moreover, in partitioning the sample of targets according to the method of payment used in the deal, the results are restricted only to targets of stock-financed deals. These results are consistent with the argument that targets of cash-only or mixed-payment deals do not have the same strong motivations to manage their earnings as their stock-financed deals counterparts do additionally supporting the findings of prior studies that the method of payment in takeovers is value relevant. The findings of this study also indicate that takeover targets manipulate earnings upwards through cutting discretionary expenses the year prior to the acquisition while they do not do so by manipulating sales or production costs. Moreover, in partitioning the sample of targets according to the method of payment used in the deal, the results are restricted only to targets of stock-financed deals, providing further robustness to the results derived under the accrual-based models. Finally, this study finds evidence suggesting that acquirers are fully aware of the accrual-based techniques employed by takeover targets and can unveil such manipulation practices. These results are robust to alternative accrual and real earnings management proxies, as well as controlling for the method of payment in the deal.

Keywords: accrual earnings management, acquisition premium, real earnings management, takeover targets

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Authors: Duangsamorn Rungsawanpho

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The objectives of this paper are to explore the corporate cultures management as determinants of employee retention company in Thailand. This study using mixed method methodology. Data collection using questionnaires and in-depth interviews. The statistics used for data analysis were percentage, mean, standard deviation and inferential statistics will include. The results show that the corporate management culture is perfect for any organization but it depends on the business and the industry because the situations or circumstances that corporate executives are met is different. Because the finding explained that the employees of the company determine the achievement of value-oriented by the corporate culture and international relations is perceived most value for their organizations. In additional we found the employees perceiving with participation can be interpreted as a positive example, many employees feel that they are part of management because they care about their opinions or ideas related with their work.

Keywords: corporate culture, employee retention, retention of employees, management approaches

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Authors: Chih-Hsiang Chang, Pei-Shan Kao

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This paper discusses the reaction of investors in the Taiwan stock market to the most probable unknown earnings-related information and the most probable known earnings-related information. As compared with the previous literature regarding the effect of an official announcement of earnings forecast revision, this paper further analyzes investors’ cognitive bias toward the unknown and known earnings-related information, and the role of media during the investors' reactions to the foresaid information shocks. The empirical results show that both the unknown and known earnings-related information provides useful information content for a stock market. In addition, cognitive bias and disposition effect are the behavioral pitfalls that commonly occur in the process of the investors' reactions to the earnings-related information. Finally, media coverage has a remarkable influence upon the investors' trading decisions.

Keywords: cognitive bias, role of media, disposition effect, earnings-related information, behavioral pitfall

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Authors: Feddaoui Amina

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In a broad sense, corporate governance covers the organization of the control and management. The term is also used in a narrower sense, to refer to the relationship between shareholders, and the company’s board. There are a lot of discussions devoted to the understanding of the corporate governance role and its principles. In this paper, we are going to describe the definition of corporate governance as a control system and its principles, and find the role of corporate governance and its pillars. Finally, we are going to drop the theoretical study on the case of Japan.

Keywords: corporate governance, place, role, Japan

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Authors: S. Thongchai

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Result of the study on knowledge management systems in businesses was shown that the most of these businesses provide internet accessibility for their employees in order to study new knowledge via internet, corporate website, electronic mail, and electronic learning system. These business organizations use information technology application for knowledge management because of convenience, time saving, ease of use, accuracy of information and knowledge usefulness. The result indicated prominent improvements for corporate knowledge management systems as the following; 1) administrations must support corporate knowledge management system 2) the goal of corporate knowledge management must be clear 3) corporate culture should facilitate the exchange and sharing of knowledge within the organization 4) cooperation of personnel of all levels must be obtained 5) information technology infrastructure must be provided 6) they must develop the system regularly and constantly.

Keywords: business organizations, information technology application, knowledge management systems, prominent improvements

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Authors: Wafaa Salah, Mostafa A. Salama, Jane Doe

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Recently, the corporate social performance (CSP) is not less important than the corporate financial performance (CFP). Debate still exists about the nature of the relationship between the CSP and CFP, whether it is a positive, negative or a neutral correlation. The objective of this study is to explore the relationship between corporate social responsibility (CSR) reports and CFP. The study uses the accounting-based and market-based quantitative measures to quantify the financial performance of seven organizations listed on the Egyptian Stock Exchange in 2007-2014. Then uses the information retrieval technologies to quantify the contribution of each of the three dimensions of the corporate social responsibility report (environmental, social and economic). Finally, the correlation between these two sets of variables is viewed together in a model to detect the correlations between them. This model is applied on seven firms that generate social responsibility reports. The results show a positive correlation between the Earnings per share (market based measure) and the economical dimension in the CSR report. On the other hand, total assets and property, plant and equipment (accounting-based measure) are positively correlated to the environmental and social dimensions of the CSR reports. While there is not any significant relationship between ROA, ROE, Operating income and corporate social responsibility. This study contributes to the literature by providing more clarification of the relationship between CFP and the isolated CSR activities in a developing country.

Keywords: financial, social, machine learning, corporate social performance, corporate social responsibility

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Authors: Naritphol Boonyakiat

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This research attempts to investigate the effects of corporate social responsibility and knowledge management factors on students’ learning process of the Silpakorn University. The goal of this study is to fill the literature gap by gaining an understanding of corporate social responsibility and the knowledge management factors that fundamentally relate to students’ learning process within the university context. Thus, this study will focus on the outcomes that derive from a set of quantitative data that were obtained using Silpakorn university’s database of 200 students. The results represent the perceptions of students regarding the impact of corporate social responsibility and knowledge management factors on their learning process within the university. The findings indicate that corporate social responsibility and knowledge management have significant effects on students’ learning process. This study may assist us in gaining a better understanding of the integrated aspects of university and learning environments to discover how to allocate optimally university’s resources and management approaches to gain benefits from corporate social responsibility and knowledge management practices toward students’ learning process within the university bodies. Therefore, there is a sufficient reason to believe that the findings can contribute to research in the area of CSR, KM and students’ learning process as an essential aspect of university’s stakeholder.

Keywords: corporate social responsibility, knowledge management, learning process, university’s students

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Authors: Marat Kozhomberdiev

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The research will investigate the modern corporate finance management technologies currently used in the era of digitalization of the global economy and the degree to which financial institutions are utilizing these new technologies in the field of corporate finance management in Kyrgyzstan. The main purpose of the research is to reveal the role of financial management technologies as joint service centers, intercompany banks, specialized payment centers in the third-world country. Particularly, the analysis of the implacability of automated corporate finance management systems such as enterprise resource planning system (ERP) and treasury management system (TMS) will be carried out. Moreover, the research will investigate the role of cloud accounting systems in corporate finance management in Kyrgyz banks and whether it has any impact on the field of improving corporate finance management. The study will utilize a data collection process via surveying 3 banks in Kyrgyzstan, namely Mol-Bulak, RSK, and KICB. The banks were chosen based on their ownerships, such as state banks, private banks with local authorized capital, and private bank with international capital. The regression analysis will be utilized to reveal the correlation between the ownership of the bank and the use of new financial management technologies. The research will provide policy recommendations to both private and state banks on developing strategies for switching and utilizing modern corporate finance management technologies in their daily operations.

Keywords: digital economy, corporate finance, digital environment, digital technologies, cloud technologies, financial management

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Authors: Chiara De Amicis, Sonia Falconieri, Mesut Tastan

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In this study, we analyze the language employed by Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) during earnings conference calls from a gender perspective. We find evidences that conference calls held by female CEOs and/or CFOs exhibit a higher level of optimism compared to conference calls held by male CEOs and/or CFOs. Moreover, female managers tend to present and discuss firm performances with less vagueness as compared to their male colleagues. We then observe the market reaction around each earnings conference call: while manager optimism is perceived as a good signal by investors, manager vagueness significantly dampens the market reaction around the call. Whether the gender of the CEO and/or the CFO delivering the conference call affects investors’ perceptions about the firm performance is still an open question. Some evidences show that the language employed by female managers conveys more valuable information for market participants as compared to the language employed by their male counterparts. This study contributes to a growing literature in finance and accounting that uses textual analysis to assess the informativeness of corporate disclosure. To our knowledge, this is the first paper that aims at answering the question whether the gender of firm’s top managers does matter when it comes to assess the informativeness of corporate spoken communication. We believe that our results will be of relevance for future research in the field. Moreover, our evidence may be used in support of the debate if a larger participation by women in the management of companies should be encouraged or not.

Keywords: conference calls, even study, gender, market reaction, textual analysis

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Authors: Ugbede Onalo, Mohd Lizam, Ahmad Kaseri, Otache Innocent

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Giving the paucity of studies on IFRS adoption and quality of banks accounting quality, particularly in emerging economies, this study is motivated to investigate whether the Nigeria decision to adopt IFRS beginning from 1 January 2012 is associated with high quality accounting measures. Consistent with prior literatures, this study measure quality of financial statement information using earnings measurement, timeliness of loss recognition and value relevance. A total of twenty Nigeria banks covering a period of six years (2008-2013) divided equally into three years each (2008, 2009, 2010) pre adoption period and (2011, 2012, 2013) post adoption period were investigated. Following prior studies eight models were in all employed to investigate earnings management, timeliness of loss recognition and value relevance of Nigeria bank accounting quality for the different reporting regimes. Results suggest that IFRS adoption is associated with minimal earnings management, timely recognition of losses and high value relevance of accounting information. Summarily, IFRS adoption engenders higher quality of banks financial statement information compared to local GAAP. Hence, this study recommends the global adoption of IFRS and that Nigeria banks should embrace good corporate governance practices.

Keywords: IFRS, SAS, quality of accounting information, earnings measurement, discretionary accruals, non-discretionary accruals, total accruals, Jones model, timeliness of loss recognition, value relevance

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Authors: Mohamed Zaher Bouaziz

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Our study examines the Ohlson Model, which links a company's market value to its equity and net earnings, in the context of the evolution of the Canadian accounting model, characterized by more extensive use of fair value and a broader measure of performance after IFRS adoption. Our hypothesis is that if equity is reported at its fair value, this valuation is closely linked to market capitalization, so the weight of earnings weakens or even disappears in the Ohlson Model. Drawing on Canada's adoption of the International Financial Reporting Standards (IFRS), our results support our hypothesis that equity appears to include most of the relevant information for investors, while earnings have become less important. However, the predictive power of earnings does not disappear.

Keywords: fair value accounting, Ohlson model, IFRS adoption, value-relevance of equity and earnings

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Authors: Ketevan Kokrashvili, Rusudan Kutateladze, Nino Pailodze

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Importance of management of legal entities under private law of which especially corporate management, as well as looking for ways of its improvement and perfection has become especially relevant in the twenty-first century, which was greatly contributed to by the global economic crisis. Some states have adopted Corporate Governance Codes; the European Union has set to work on a series of directives the main purpose of which is an improvement of corporate governance, provision of greater transparency and implementation of an effective control mechanism. This process is not yet completed, and various problematic issues associated with management of legal persons are still being debated among practitioner experts and scholars. Georgia is not an exception in this regard. The article discusses the legislative gaps, and in some cases, discrepancies having arisen in legal relationships under private law and having caused many practical problems. This especially applies to the management of capital companies.

Keywords: business entities, corporate management, capital public management, existing problems, legal discrepancies

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Authors: Jagbir Singh Kadyan, C. A. Suman Kadyan

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The researchers attempts to establish whether a relationship exists between the social activities undertaken & the funds that has been spent by the selected corporate organisations. Corporate listed on the (NSE) National Stock Exchange of India, under different categories shall be selected as a sample for the purpose of this study. The researches shall also study the dynamics of corporate social responsibility funding, financing & management of corporate social responsibility funds by the above selected organisations in the Indian context. The rationale behind selecting & undertaking specific corporate social responsibility activities shall be analysed & interpreted to discover the real drivers of corporate social responsibility. Besides above, an attempt shall further make an effort to understand & analyse the nature of impact on the selected corporate organisations on its overall performances due to the activities undertaken under their specific corporate social responsibility programs.

Keywords: corporate social responsibility, organisational performance, national stock exchange, sustainability, society, health, education, sanitation, environment

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Authors: Khaldoon G. Albitar, Hassan Y. Kikhia, Jin P. Zhang

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Since 2007, all companies listed on both Shanghai Stock Exchange and Shenzhen Stock Exchange are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). This study investigates the impact of adopting IFRS on accounting quality for a sample of listed on Chinese companies during the period 2003-2013 with sample of 10846 observations over a four-year period before and a five-year period after the adoption of IFRS. This study tests whether the level of earnings management is significantly lower after the adoption of IFRS, and reported earnings is more value relevant during the IFRS period by using the Ohlson model and Jones model, as modified by Dechow. The empirical results show that accounting quality improved with lower earnings management and higher value relevant after the adoption of IFRS in China. The current study contributes to the literature on IFRS adoption and earning quality in two ways. First, As most of the existing studies on earnings quality and IFRS have been conducted on data from the U.S and European countries, this study fills a gap in the existing literature by studying the effect of adoption of IFRS on earnings quality in an emerging market. Second, the findings of our study have important implications for policymakers, auditors, multinational firms, and users of financial reports. As the rapid growth of China's economy gains global recognition, the Chinese stock market is capturing the attention of international investor.

Keywords: international financial reporting standards (ifrs), accounting quality, earnings management, value relevance, china

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Authors: Shazia Ali, Yves Mard, Éric Severin

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To the best of our knowledge, this is the first study to have analyzed the impact of a) firm-specific product-market power and b) industry competition on earnings management behavior of European firms in distress versus healthy years while controlling for firm-level characteristics. We predicted a significant relationship between firms’ product market power and earnings management tools and their trade-off under the moderation effect of financial distress. We found that the firm-level market power hereinafter referred to as MP (proxied by the industry-adjusted Lerner Index) is positively associated with both real and accrual earnings management. However, MP is associated with a higher level of real earnings management compared to accrual earnings management in distress years compared to healthy years. On the other hand, industry product market power (representing low competition and proxied by the inverse of the total number of firms in an industry hereinafter referred to as NUMB) and firms product market power (proxied by firm market share hereinafter referred to as MS) are associated with lower inflationary accruals and higher deflationary accruals respectively. On the other hand, they are found to be linked with higher real earnings management in distress versus healthy years. When we divided the sample into small and big firms based on their respective industry-year median total assets, we found that all three measures of industry competition (Industry Median Lerner Index (hereinafter referred to as IMLI), NUMB, and Herfindahl–Hirschman Index (hereinafter referred to as HHI) indicate that small firms in low-competitive industries in financial distress are more likely to inflate their earnings through discretionary accruals. While big firms in this situation are more likely to lower the use of both inflationary and deflationary discretionary accruals as indicated by IMLI and HHI and trade-off accruals earnings management for real earnings management as indicated by NUMB. Moreover, IMLI and HHI did not show any interesting results when we divided the sample based on the firm Lerner Index/Market Power. However, the distressed firms with high market power (MP>industry median) are found to engage in income-decreasing discretionary accruals in low-competitive industries (high NUMB). Whereas firms with low market power in the same industry use downward discretionary accruals but inflate income using real activities (abnCFO). Our findings are robust across alternate measures of discretionary accruals and financial distress, such as the Altman Z-Score. The finding of the study is valuable for accounting standard setters, competition authorities, policymakers, and investors alike to help in informed decision-making.

Keywords: financial distress, earnings management, market competition

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Authors: D. Bąk-Grabowska, K. Grzesik, A. Iwanicka, A. Jagoda

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The process of human resources management in the structures of corporate groups demonstrates certain specificity, resulting from the division of decision-making and executive competencies, which occurs within these structures between a parent company and its subsidiaries. The subprocess of employee assessment is considered crucial, since it provides information for the implementation of personnel function. The empirical studies conducted in corporate groups, within which at least one company is located in Poland, confirmed the critical significance of employee assessment systems in the process of human resources management in corporate groups. Parent companies, most often, retain their decision-making authority within the framework of the discussed process and introduce uniform employee assessment and personnel controlling systems to subsidiary companies. However, the instruments for employee assessment applied in corporate groups do not present such specificity.

Keywords: corporate groups, employee periodical assessment system, holding, human resources management

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Authors: T. Miková

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This paper analyzes the effect of a single uniform accounting rule on reporting quality by investigating the influence of IFRS on earnings management. This paper examines whether earnings management is reduced after IFRS adoption through the use of “loss avoidance thresholds”, a method that has been verified in earlier studies. This paper concentrates on two European countries: one that represents the continental code law tradition with weak protection of investors (France) and one that represents the Anglo-American common law tradition, which typically implies a strong enforcement system (the United Kingdom). The research investigates a sample of 526 companies (6822 firm-year observations) during the years 2000 – 2013. The results are different for the two jurisdictions. This study demonstrates that a single set of accounting standards contributes to better reporting quality and reduces the pervasiveness of earnings management in France. In contrast, there is no evidence that a reduction in earnings management followed the implementation of IFRS in the United Kingdom. Due to the fact that IFRS benefit France but not the United Kingdom, other political and economic factors, such legal system or capital market strength, must play a significant role in influencing the comparability and transparency cross-border companies’ financial statements. Overall, the result suggests that IFRS moderately contribute to the accounting quality of reported financial statements and bring benefit for stakeholders, though the role played by other economic factors cannot be discounted.

Keywords: accounting standards, earnings management, international financial reporting standards, loss avoidance, reporting quality

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Authors: Jamila Garba Audu, Shehu Usman Hassan

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The widespread failure in the financial information quality has created the need to improve the financial information quality and to strengthen the control of managers by setting up good firms structures. Published accounting information in financial statements is required to provide various users - shareholders, employees, suppliers, creditors, financial analysts, stockbrokers and government agencies – with timely and reliable information useful for making prudent, effective and efficient decisions. The relationship between corporate governance and performance to financial reporting quality is imperative; this is because despite rapid researches in this area the findings obtained from these studies are constantly inconclusive. Data for the study were extracted from the firms’ annual reports and accounts. After running the OLS regression, a robustness test was conducted for the validity of statistical inferences; the data was empirically tested. A multiple regression was employed to test the model as a technique for data analysis. The results from the analysis revealed a negative association between all the regressors and financial reporting quality except the performance of listed manufacturing firms in Nigeria. This indicates that corporate governance plays a significant role in mitigating earnings management and improving financial reporting quality while performance does not. The study recommended among others that the composition of audit committee should be made in accordance with the provision for code of corporate governance which is not more than six (6) members with at least one (1) financial expert.

Keywords: corporate governance, financial reporting quality, manufacturing firms, Nigeria, performance

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Authors: Naritphol Boonjyakiat

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This research attempts to investigate the effects of corporate social responsibility and knowledge management factors on students’ job performance of the Silpakorn University’s internship program within various organizations. The goal of this study is to fill the literature gap by gaining an understanding of corporate social responsibility and the knowledge management factors that fundamentally relate to students’ job performance within the organizations. Thus, this study will focus on the outcomes that were derived from a set of secondary data that were obtained using a Silpakorn university’s data base of 200 students and selected employer assessment and evaluation forms from the companies. The results represent the perceptions of students towards the corporate social responsibility aspects and knowledge management factors within the university and their job performance evaluation from the employers in various organizations. The findings indicate that corporate social responsibility and knowledge management have significant effects on students’ job performance. This study may assist us in gaining a better understanding of the integrated aspects of university and workplace environments to discover how to optimally allocate university’s resources and management approaches to gain benefits from corporate social responsibility and knowledge management practices toward students’ job performance within an organizational experience settings. Therefore, there is a sufficient reason to believe that the findings can contribute to research in the area of CSR, KM, and job performance as essential aspect of involved stakeholder.

Keywords: corporate social responsibility, knowledge management, job performance, internship program

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Authors: Eda Orhun

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Purpose: This paper analyzes a target firm’s decision to voluntarily disclose information during a takeover event and the effect of such disclosures on the outcome of the takeover. Such voluntary disclosures especially in the form of earnings forecasts made around takeover events may affect shareholders’ decisions about the target firm’s value and in return takeover result. This study aims to shed light on this question. Design/methodology/approach: The paper tries to understand the role of voluntary disclosures by target firms during a takeover event in the likelihood of takeover success both theoretically and empirically. A game-theoretical model is set up to analyze the voluntary disclosure decision of a target firm to inform the shareholders about its real worth. The empirical implication of model is tested by employing binary outcome models where the disclosure variable is obtained by identifying the target firms in the sample that provide positive news by issuing increasing management earnings forecasts. Findings: The model predicts that a voluntary disclosure of positive information by the target decreases the likelihood that the takeover succeeds. The empirical analysis confirms this prediction by showing that positive earnings forecasts by target firms during takeover events increase the probability of takeover failure. Overall, it is shown that information dissemination through voluntary disclosures by target firms is an important factor affecting takeover outcomes. Originality/Value: This study is the first to the author's knowledge that studies the impact of voluntary disclosures by the target firm during a takeover event on the likelihood of takeover success. The results contribute to information economics, corporate finance and M&As literatures.

Keywords: takeovers, target firm, voluntary disclosures, earnings forecasts, takeover success

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Authors: Idris Adamu Alhaji, Wan Fauziahbt Wan Yusoff

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This study was conducted to identify the relationship between Corporate Governance attributes and Firm Performance, various studies, had been carried out mostly in developed countries, in order to identify the relationship between corporate governance attributes and firm performance. Since, the value creation of corporate governance can be measured through the firm performance, corporate governance act as a mechanism to align management's goals with the stakeholders especially to increase firm performance. Despite extensive study of corporate governance there is still an inconsistence relationship between corporate governance attributes and firm performance. Therefore, the aim of this paper is to identify the relationship between corporate governance attributes and firm performance. Five corporate governance element were used as independent variables which include: Independent director, board size, audit committee, leadership structure and board meeting. Meanwhile, the dependent variables are two firm performance measurements; return on equity (ROE) and earning per share (EPS). This study uses quantitative approaches whereby data were gathered from secondary source data were collected from Annual Reports of the companies, online journals etc. This study revealed that, there is a significant relationship between corporate governance attributes and firm performance. Therefore, the results show that good corporate governance practice influence firm performance. Finally, it's hoped that this study provides current corporate governance scenario in Malaysia that can be used to enhance the development of corporate governance of the country.

Keywords: corporate governance, return on equity, earning per share, financial performance

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Authors: Giulia Leoni, Cristina Florio

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The paper aims to investigate the factors driving the increasing alignment of Italian earnings management (EM) research to US research on the same field. After characterizing the progressive similarity of Italian EM research with respect to US one by means of an historical comparison, the paper relies on a subsequent secondary source analysis to detect the possible causes of said alignment. Once identified that the alignment increased along three subsequent periods, the paper analyses and discusses this incremental similarity according to new institutional sociology (NIS) and highlights the presence of different combination of isomorphic pressures that help explaining this incremental similarity. The paper contributes to the institutional literature by providing evidence of isomorphism in academic research; it also contributes to accounting research by indicating the forces that are able to drive change and development in accounting research at national and international level. The paper also enlarges the explanatory value of NIS in alternative contexts, like academic accounting research.

Keywords: accounting research, earnings management, international comparison, Italy, new institutional sociology, US

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Authors: Tareq N. Issa

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The main pressuring challenges of global competition and high returns have forced businesses to shift their strategic competitive advantage from physical distribution management to integrated logistics management, finally moving into supply chain management. Conventionally, corporate profitability is a function of cost, capital employed, revenue and customer service. This article gives an insight into the effect of supply chain management on each of the above variables. It investigates the impact of the changing levels/ effects of these variables on corporate profitability and the means of measuring supply chain financial effectiveness. Information technology tools form the basis for supply chain optimal performance through alignment of supply chain systems in this ever increasing complexity in business decisions.

Keywords: corporate profitability, sypply chain systems, business decisions, competitive advanage

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Authors: Vijay Marisetty, Poonam Singh

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Research on the effect of director's network connections on investor welfare is inconclusive. Some studies suggest that directors' connections are beneficial, in terms of, improving earnings information, firms valuation for new investors. On the other hand, adverse effects of directorial networks are also reported, in terms of higher earnings management, options back dating fraud, reduction in firm performance, lower board monitoring. From regulatory perspective, the role of directorial networks on corporate welfare is crucial. Cognizant of the possible ill effects associated with directorial networks, large investors, for better representation on the boards, are building their own database of prospective directors who are highly qualified, however, sourced from outside the highly connected directorial labor market. For instance, following Dodd-Frank Reform Act, California Public Employees' Retirement Systems (CalPERs) has initiated a database for registering aspiring and highly qualified directors to nominate them for board seats (proxy access). Our paper stems from this background and tries to explore the chances of outside directors getting directorships who lack established network connections. The paper is able to identify such aspiring directors' information by accessing a unique Indian data sourced from an online portal that aims to match the supply of registered aspirants with the growing demand for outside directors in India. The online portal's tie-up with stock exchanges ensures firms to access the new pool of directors. Such direct access to the background details of aspiring directors over a period of 10 years, allows us to examine the chances of aspiring directors without corporate network, to enter directorial network. Using this resume data of 16105 aspiring corporate directors in India, who have no prior board experience in the directorial labor market, the paper analyses the entry dynamics in corporate directors' labor market. The database also allows us to investigate the value of corporate network by comparing non-network new entrants with incumbent networked directors. The study develops measures of network centrality and network degree based on merit, i.e. network of individuals belonging to elite educational institutions, like Indian Institute of Management (IIM) or Indian Institute of Technology (IIT) and based on job or company, i.e. network of individuals serving in the same company. The paper then measures the impact of these networks on the appointment of first time directors and subsequent appointment of directors. The paper reports the following main results: 1. The likelihood of becoming a corporate director, without corporate network strength, is only 1 out 100 aspirants. This is inspite of comparable educational background and similar duration of corporate experience; 2. Aspiring non-network directors' elite educational ties help them to secure directorships. However, for post-board appointments, their newly acquired corporate network strength overtakes as their main determinant for subsequent board appointments and compensation. The results thus highlight the limitations in increasing board diversity.

Keywords: aspiring corporate directors, board diversity, director labor market, director networks

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Authors: Sibel Kurt

Abstract:

In this study, with the use of Goffee and Jones’s corporate culture classification and the scale of this classification, there aimed to analyze a company’s corporate culture which does not have a public relations or communication department. First of all, the type of corporate culture in the company had been determined. Then it questioned if there are subcultures which formed according to demographics or the department of work. In the survey questionnaire, there are 53 questions total. 6 of these questions are about demographics, and 47 of them are about corporate culture. 152 personnel of the company had answered the survey, and the data have been evaluated according to frequency, descriptive, and compare means tests. The type of corporate culture of the company was determined as the 'communal' from the typology of Goffee and Jones in the positive form. There are no subcultures in the company which bases on the demographics, but only one subculture has determined according to the department of work. As a result, the absence of public relations department, personnel’s low level of awareness about corporate culture, and the lack of information between management and employees has been revealed.

Keywords: corporate culture, subculture, public relations, organizational communication

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Authors: L. Feleagă, M. Dumitrașcu, N. Feleagă

Abstract:

This article is a research on corporate governance. The aim of the study is to focus a special attention on the importance of corporate social responsibility and corporate governance, which are relevant, indeed necessary, for organizations. In this regard, we analyzed the corporate social responsibility in the context of corporate governance for companies listed on Bucharest and Bombay Stock Exchange. Therefore, we bring into the spotlight some differences between India and Romania linked with the importance ascribed to corporate social responsibility of a company. We presented the results of the demarche and we concluded suggestions regarding further research in this area. The study increases the awareness, identifies and articulates desirable behaviors, which are not intended to be exhaustive.

Keywords: corporate governance, corporate social responsibility, disclosure, listed companies

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Authors: Shola Haruna Adeosun, Ajoke F. Adebiyi

Abstract:

Business organizations in Nigeria have failed to realize the role of a good corporate image policy in business dealings. This is probably because they do not understand the concept of corporate image and the necessary tools for promoting it. Corporate image goes beyond attractive products or rendering quality services, advertising and paying good salary. It pervades every aspect of business concern, from the least worker’s personality to the dealings within the organization and with the large society. In the face of the societal dynamics, especially in the business world, brought by technology, companies are faced with stiff competition that maintaining a competitive edge requires aggressive strategies. One of such strategies in effective corporate image management is promotion. This study investigates the strategies that could be deployed in order to build and promote the effective corporate image, as well as enhance profit margins of an organization, using Phinomar Nigeria Limited, Ngwo as case study. The study reveals that Phinomar Nigeria Limited has a laid down corporate image policy but not effectively managed; and that, strategies deployed to promote corporate image are limited; while responses to Phinomar products are fairly high. It, therefore, suggests profitable products but requires periodical improvement in the employee's welfare and work environment; as well as, the need to increase the scope of Phinomar’s social responsibility.

Keywords: corporate image, effective, enhancing, management, profitability, strategy

Procedia PDF Downloads 283