pt. 1. The mandatory adopton of IFRS and Big4 audits on earnings quality -- pt. 2. The cross-border spillover effect of financial reporting on investment efficiency: evidence from mandatory IFRS adoption -- pt. 3. Discretionary fair value earnings and CEO cash compensation: evidence from continental Europe. / Chen, Chen. / Thesis (Ph.D.)--Chinese University of Hong Kong, 2011. / Includes bibliographical references (leaves 148-157). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstract also in Chinese.

Both revenues and earnings of diversified firms are increasingly being reported, to the government and the public, on a subentity basis. Adequate criterial foundations do not exist to permit the effective general prescription of specific segment delineations, nor is it known whether such criterial assists can be usefully developed.Demands for segmentation in financial reports are currently intense. Actual reporting practices are largely nonstandardized as to either the definition of segments employed or, the disclosure modes used to present them. Neither conceptual nor theoretical supports are now adequate in guidance to the forms and levels of segmentation activity now required. Prerequisite to effective development of such supports is an-adequate understanding of the corporate diversification phenomenon itself. This dissertation project investigates and analyzes the nature of corporate diversification, as manifested in (1) its historical evolution; (2) general comprehensions of the phenomenon, as evidenced in published opinions and conceptual reasoning schemes of both authoritative experts and lay investors; and (3) formal research by others. Additionally, the results of these investigations and analyses are developed into conceptual schemes and theoretical frameworks, at moderate levels of abstraction.

A research report submitted in partial fulfilment of the degree of Masters of Commerce in Accounting 2016. / This paper explores the logics of resistance to fair value accounting, which entails the motivations to resist, as well as the mechanisms of resistance. It applies an interpretive approach to investigate this, using data collected from interviews with a sample of South African accounting professionals. The study demonstrates that while fair value accounting is being applied in the financial statements of organisations from a legalistic perspective, the application is superficial and ceremonious due to an established culture of compliance, and the need for funding, which engenders a ‘tick the box’ approach. The superficiality of application is complimented with a range of motivations to resist IFRS 13, which stem from practical concerns as well as theoretical, to create for a resistant attitude to fair value accounting. This resistance has been evidenced in this study, to manifest in various mechanisms that can be employed to avoid fair value accounting. These mechanisms are indicative of decoupling since they involve gaps being created between the purpose of financial statements, and the financial statements prepared, without blatant disregard of fair value accounting principles. These findings have been used to formulate recommendations which may be useful for preparers of financial statements, auditors and standard setters alike. While the aim of the study is not to identify deficiencies of fair value accounting principles, the consequence of exploring logics of resistance to fair value accounting is that it highlights areas that require further assessment in order to achieve the objectives of standards. / MT2017

Doctoral thesis submitted to the University of the Witwatersrand, Faculty of Commerce, Law and Management in fulfilment of the requirements for the degree of the Doctor in Philosophy, December 2016 / Healy and Wahlen (1999:368) define earnings management as an event that “occurs when managers use judgement in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers.” Management’s intent to mislead users distinguishes accruals that signal managers’ inside information about future cash flows from earnings management which intends to misrepresent performance (Dechow and Skinner, 2000; Parfet, 2000). Earnings management is a very serious issue; if it is not detected it can result in large financial losses for investors and creditors. Earnings data is a fundamental input to valuing a firm’s shares and prospects. Erroneous assessments of future cash flows because of misleading information will result in invalid share valuations and incorrect lending decisions which can have negative consequences on capital markets. The severe negative consequences of earnings manipulation, if undetected, suggest that investors, auditors and regulatory bodies should be aware of the prevalence of earnings management in an economy, whether investors are able to detect and price suspected earnings management and the most efficient way to detect it. This thesis aims to answer two fundamental questions: Does earnings management exist in South Africa? Are investors in South Africa misled by earnings management? How to detect earnings manipulation is the predominant theme in earnings management literature. The majority of research has been conducted in advanced economies and has transformed from identifying discontinuities in earnings distributions and measuring discretionary accruals to sophisticated predictive models, such as the F-score (Dechow, Ge, Larson and Sloan, 2011). Yet, research into the subject is sparse in emerging markets and tends to replicate existing methodology. The objective of this thesis is to examine earnings management in the South African economy, with the specific aim of identifying a databank of suspected earnings management firms that can be used for further research. Because the number of firms that have been forced to restate earnings is small in this environment, this thesis resorts to identifying suspected earnings management firms using discontinuities in earnings distributions. South Africa is similar to other emerging economies in that it is characterised by concentrated ownership, weaker legal enforcement and a smaller stock exchange. The South African environment is dissimilar to emerging economies as the JSE is considered to be well regulated, accounting and auditing standards are world class and accounting transparency and disclosure are satisfactory (Leuz, Nanda, and Wysocki, 2003). The results of this thesis are relevant in an institutional and macroeconomic setting where incentives to manipulate earnings, enforcement, legal protection, rule of law and sample size may differ from those in developed economies. This thesis firstly, focuses on methodological issues that may be encountered by researchers in identifying discontinuities in earnings distributions in emerging economies and secondly, validates kernel density estimation, Lahr (2014), as a viable methodology to test for earnings management by comparing total accruals, discretionary accruals and working capital accruals between suspected earnings management and non-earnings management firms. Thirdly, deferred tax expense is considered as a predictor variable in place of discretionary accruals in detecting suspected earnings management firms. Finally, in order to investigate investors’ reaction to suspected earnings management this thesis investigates whether the market prices suspected earnings management firms differently from non-earnings management firms. Pre- selected researcher binwidths (Burgstahler and Dichev, 1997, Coulton, Taylor and Taylor, 2005, Glaum, Lichtblau, and Lindemann, 2004; Holland and Ramsay, 2003) prove to be unsuitable in this milieu. Consequently kernel density estimation Lahr (2014), which derives bandwidths from the empirical earnings distributions, is used to identify discontinuities and to concurrently investigate the effect of deflation on the location of discontinuities. Discontinuities are shown to exist in earnings levels and changes distributions and emerge around zero in earnings levels distributions where number of shares is the deflator. Two important results emerge from this analysis. Firstly, when kernel density estimation is used in levels distributions, there is evidence that deflating by market value of equity and total assets shifts the location of suspected earnings management firms to the second and third intervals to the right of zero. Scaling does not alter the location of suspected earnings management firms in earnings changes distributions. Secondly, in the earnings deflated by number of shares distribution there is evidence that the band of suspected earnings management firms contains the results of firms that have upwardly and downwardly manipulated earnings. The implication of these findings are that deflating by number of shares is probably the most efficient scalar and that if doubt exists, alternative deflators should, at least, be compared between profit and loss firms. In addition, in the presence of evidence of downwards earnings management, researchers should evaluate whether and how to identify firms that are suspected of having reduced earnings. Specifically in emerging market research, these results indicate that it is inappropriate to merely replicate distribution research based on researcher selected binwidths and that kernel density estimation is probably more efficient in identifying discontinuities as it gives researchers a much broader perspective on the location of discontinuities. Kernel density estimation is confirmed as a method to identify discontinuities in earnings levels and changes distributions by comparing total, discretionary and working capital accruals between suspected earnings management and non-earnings management firms. Evidence that discontinuities in earnings distributions may be attributable to earnings management activities is found where earnings levels and earnings changes are deflated by number of shares and market value of equity, both modified Jones and asymmetric BS discretionary accruals are significantly income increasing in suspected earnings management (EM) firms and income decreasing in non-EM firms. Scaling by total assets is not a suitable deflator in the South African context as it appears to affect the sign and statistical significance of the accruals metrics in the earnings levels before and after tax distributions. This result does not detract from the efficiency of kernel density estimation as it is attributable to the inefficiency of total accruals as a scalar in an emerging market environment. Furthermore, this research endorses Ball and Shivakumar’s (2006) (BS) finding that an asymmetric discretionary accruals model is more efficient in estimating discretionary accruals in all the distributions, irrespective of deflators. In addition, the results of this thesis show that, in an emerging economy, deferred tax is incrementally useful to modified- Jones and the asymmetric BS discretionary accruals in detecting earnings management. The implication of this result is useful to investors, auditors and regulators because deferred tax movements and its components are a visible and identifiable numbers in financial statements. Deferred tax expense can be used, instead of complicated discretionary accrual models, to identify evidence of earnings management. This means that the components of the deferred tax asset or liability accounts can be analysed to highlight unusual movements which may in turn, focus attention on unusual accruals. For researchers, this result has important implications. Kernel density estimation can be used to identify suspected earnings management firms which can be used to further research. The final chapter of this thesis explores whether investors price suspected earnings management and nonearnings management firms differently and finds that, in this South African sample, there is no difference in price levels or cumulative abnormal returns in suspected earnings management and non-earnings management firms. This result is in sharp contrast to Balsam, Bartov, and Marquardt (2002) and Baber, Shuping, and Sok-Hyong (2006) who report a negative association between unexpected discretionary accruals and cumulative abnormal returns and Keung, Lin, and Shih (2010) who find that investors react negatively to zero or small earnings surprises. To some extent the results of this section of the thesis supports the finding in Gavious (2007) that prices react to discretionary accruals only after the introduction of revised analysts’ forecasts.The finding in this thesis implies that investors in South Africa are unable to detect earnings management. This outcome should be viewed in the context of prior research that reports that the JSE may be inefficient (Bhana, 1995, 2005, 2010; Hoffman, 2012; Ward and Muller, 2012; Watson and Roussow, 2012) and may be attributed to the fact that there is no signal to investors that the quality of earnings may be questionable in the sample of suspected earnings management firms. All in all, the findings of this thesis indicate the existence of earnings management in listed companies in South Africa. / XL2018

by Kam Pok-man, Yip Shiu-kwong. / Thesis (M.B.A.)--Chinese University of Hong Kong, 1983. / Bibliography: leaves 62-64.

This paper investigates the spread of aggressive corporate tax reporting by modeling a firm's decision to adopt the corporate-owned life insurance (COLI) shelter. I use a sample of known COLI participants to examine whether certain firm characteristics are associated with the decision to adopt a COLI shelter. I find some evidence that firms with higher performance-matched discretionary accruals are more likely to adopt a COLI shelter, suggesting a positive relation between aggressive financial reporting and aggressive tax reporting. I also find that firms with greater capital market visibility are less likely to adopt a COLI shelter, consistent with a potential reputational cost for being associated with aggressive tax avoidance activities. Further, my results suggest that COLI adopters are generally R&D intensive firms with low leverage and few foreign operations. In addition to firm specific characteristics, I consider two explanations for the spread of COLI adoption motivated by theory on diffusion of innovations and institutional isomorphism. I investigate whether firms imitate prior COLI adopters and whether COLI adoption spreads through common auditors. My results are not consistent with an imitation explanation. Further, my results suggest that having the same auditor as a prior COLI adopter does not increase the likelihood that a firm will adopt COLI. / text

No description available.

The question as to whether companies can “do well while doing good” has been investigated by academics for over four decades. Conclusive evidence of a positive link between Corporate Social Responsibility (CSR) and Corporate Financial Performance (CFP) so far has however remained elusive. In building on previous research findings, this study aimed to provide a deeper understanding into the mediating and moderating factors that impact a firm’s ability to generate returns from social investment. In particular, the moderating effect of social and environmental (SEI) impact levels on CSR returns were further investigated. Following the risk-reduction and value-creating hypotheses, it was asserted that sustainable firms with high SEI would yield superior CFP as compared to their peers with lower levels of social and environmental impact. The findings revealed that sustainable firms with high levels of social and environmental impact indeed had higher CFP than their peers with medium and low social and environmental impacts levels. However, the same results were yielded for non-sustainable companies. Although the main hypothesis did not yield the expected outcomes, the study provided important insights into the role of moderating factors on the ability for firms to generate returns from CSR. Moreover, the study uncovered previously unexplored areas of CSR and thereby opened up new avenues for future research. / Dissertation (MBA)--University of Pretoria, 2014. / lmgibs2015 / Gordon Institute of Business Science (GIBS) / Unrestricted

The objective of this research is to assess whether the financial markets impute motives to bidding firm managers in setting the new equilibrium share price at the time a tender offer is announced.

A research report submitted In partial fulfilment of the degree Master of Commerce (Accounting) University of the Witwatersrand / This research report evaluates the nature of, and gathers evidence of, the potential misuse of the non-GAAP 'adjusted earnings' by JSE-listed firms in South Africa. The prior literature is explored and applied to the South African context which is a unique environment due to the mandatory use of the non-GAAP Headline Earnings . The prior literature provides the grounding for the research methods which enhance the validity of the study. Adjusted earnings are analysed through 3 research questions and sub-questions. The first research question focuses on the nature of the use of adjusted earnings in South Africa, by examining the extent of use of adjusted earnings by a population of JSE firms, as well as the most common types of adjustments used. It is evaluated using descriptive statistical methods from data from databases and company annual financial reports. Research question 2 gathers evidence for misuse through the identification of 'valid' and 'invalid' adjustments made in the determination of adjusted earnings, as well as the identification of the repeated use of particular adjustments, which are indicators of misuse from the prior research of Bhattacharyaa, Black, Christensenb and Larsonc (2003) and Doyle, Lundholm and Soliman (2003). This question uses an ANOVA and repeated measure approach respectively using the same data from research question 1. The third research question examines whether there is an association between adjusted earnings and whether firms meet or beat analyst earnings forecasts more often (the dependent variable) as set out in Doyle, Jennings and Soliman (2013). This is assessed using logistic regression analysis using analyst earnings forecast data and company results data The results indicate that types of firms and adjustments made in South Africa are similar to U.S. literature. It raises questions around use of adjusted earnings as a performance metric and the use of Headline Earnings in South Africa. Evidence of misuse of adjusted earnings was found. In addition, a strong relationship similar to the Doyle et al. (2013) findings was found between the use of upwardly adjusted earnings and the propensity of firms to meet or beat analyst forecasts. Whether a firm s accounting earnings met or beat the forecast was also found to have significant influence on the dependent variable. It was also found that South African firms met or beat analyst forecasts significantly less often than U.S. firms, suggesting that there may be structural differences in the analyst forecasts environment in South Africa when compared to the U.S. The results suggest that adjusted earnings may be misused in South Africa, and one of the motivations to do so is to meet or beat analyst earnings forecasts. / MT2017