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Financial Reporting and Auditing
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Financial Reporting and Auditing

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Business and Entrepreneurship".

Deadline for manuscript submissions: 31 August 2025 | Viewed by 12779

Special Issue Editors

Dr. Hua Christine Xin

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Guest Editor
Department of Accounting, Mitchell College of Business, University of South Alabama, Mobile, AL 36688, USA
Interests: financial accounting; auditing
Prof. Dr. Khaled Hussainey

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Guest Editor
Faculty of Business and Law, University of Portsmouth, Portsmouth PO1 3DE, UK
Interests: corporate narrative reporting; international financial reporting standards (IFRS); Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI); extensible business reporting language (XBRL); market-based accounting research; auditing, corporate governance; earnings management; corporate investment efficiency; corporate finance; Islamic accounting and finance
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

This Special Issue, of utmost importance, focuses on the broad topic of “Financial Reporting and Auditing” and addresses significant issues in this area. It connects accounting theory and practice and facilitates interdisciplinary and international knowledge of elements influencing financial reporting and auditing.

The topics include financial accounting topics, which focus on how accounting information influences capital markets, but are not restricted to financial reporting, financial accounting, forensic accounting, accounting information systems, management accounting, social and environment reporting, taxation, and governmental accounting. Also included are auditing-related topics that focus on the link between accounting information produced by firms and capital markets, such as auditing fees, audit markets, and audit quality. We also welcome innovative research ideas on increasing market efficiency using the most recent technologies.

We welcome the submission of high-quality manuscripts that are theoretically or empirically based. Contributions should focus on improving the knowledge of accounting information and its influence on the effectiveness of capital markets. We also welcome innovative ideas, cross-disciplinary research, and international research to prompt the understanding of accounting and impact accounting practice. We aim to publish 10 papers in this Special Issue and make them available in printed book form.

Dr. Hua Christine Xin
Prof. Dr. Khaled Hussainey
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • financial reporting
  • financial accounting
  • auditing
  • forensic accounting
  • accounting information systems
  • management accounting
  • social and environmental reporting
  • taxation
  • governmental accounting

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Published Papers (9 papers)

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Research

24 pages, 1216 KiB  
Article
The Mediating Role of Conscientiousness in the Relationship Between Auditors’ Ethical Idealism and Fraud Detection
by Abdulrahman Almalki, Yousef Basodan and Helmi Boshnak
J. Risk Financial Manag. 2025, 18(5), 244; https://doi.org/10.3390/jrfm18050244 - 1 May 2025
Viewed by 173
Abstract
Despite the recognized importance of ethical idealism in enhancing fraud detection in the audit context, there remains limited understanding of the mediating role of conscientiousness in the relationship between auditors’ ethical idealism and fraud detection. The purpose of this paper is to analyze [...] Read more.
Despite the recognized importance of ethical idealism in enhancing fraud detection in the audit context, there remains limited understanding of the mediating role of conscientiousness in the relationship between auditors’ ethical idealism and fraud detection. The purpose of this paper is to analyze the influence of auditors’ ethical idealism on fraud detection via using the conscientiousness of auditors as a mediator. This study employs a cross-sectional approach, and quantifiable data were gathered via structured surveys from 401 external auditors employed in offices licensed to practice the accounting and auditing profession in Saudi Arabia. Accidental sampling was used to ensure a representative sample of auditors in Saudi audit firms. This study utilized the Structural Equation Modeling (SEM) technique to examine the relationships between ethical idealism (as independent variable), conscientiousness (as mediating variable), and fraud detection (as dependent variable). The result showed that ethical idealism has a positive effect on auditors’ detection of fraud. However, the proposed mediation effect of conscientiousness between ethical Idealism and fraud detection was not statistically significant. The research underscores that the ethical idealism of auditors can enhance fraud detection, especially when accounting firms give priority to ethical training programs, ensuring that they are guided by strong ethical idealism rather than personal conscientiousness. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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18 pages, 1777 KiB  
Article
Exploration of Audit Technologies in Public Security Agencies: Empirical Research from Portugal
by Diogo Leocádio, Luís Malheiro and João Reis
J. Risk Financial Manag. 2025, 18(2), 51; https://doi.org/10.3390/jrfm18020051 - 23 Jan 2025
Viewed by 851
Abstract
The integration of artificial intelligence (AI) in the public sector is driving significant advancements in governance and management, changing the way public organizations operate. In particular, AI technologies have a profound impact on auditing practices, enhancing efficiency and accountability. This article aims to [...] Read more.
The integration of artificial intelligence (AI) in the public sector is driving significant advancements in governance and management, changing the way public organizations operate. In particular, AI technologies have a profound impact on auditing practices, enhancing efficiency and accountability. This article aims to explore how AI can improve audit processes in a Portuguese public security agency, focusing on its transformative potential in streamlining tasks such as data extraction, analysis, and verification. Using a qualitative research approach, the study employs custom Python algorithms to examine the integration of key indicators into the audit process, specifically through the analysis of economic classification and expenditure limits. The findings demonstrate that personalized algorithms can reduce manual workloads, improve accuracy, and strengthen compliance with financial regulations, providing valuable contributions for decision-making. However, challenges such as data privacy and infrastructure investment remain, emphasizing the need for further research. Future studies should focus on adapting AI-based auditing models to various public administration contexts, addressing organizational changes, and advancing public governance. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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20 pages, 902 KiB  
Article
Business Strategy and Auditor Report Lag: Do Board Characteristics Matter? Evidence from an Emerging Market
by Aref M. Eissa, Ahmed Diab and Arafat Hamdy
J. Risk Financial Manag. 2025, 18(2), 47; https://doi.org/10.3390/jrfm18020047 - 22 Jan 2025
Viewed by 958
Abstract
This study investigates the association between business strategy and audit report lag (ARL). In addition, it reveals the moderating influence of board characteristics on this relationship. We used data collected from Egyptian firms listed on EGX100 during the period from 2014 to 2019, [...] Read more.
This study investigates the association between business strategy and audit report lag (ARL). In addition, it reveals the moderating influence of board characteristics on this relationship. We used data collected from Egyptian firms listed on EGX100 during the period from 2014 to 2019, which were analyzed using ordinary least squares and binary logistic regression models. Our study revealed a decrease in ARL for firms adopting cost leadership or differentiation strategies. In addition, we found that ARL decreased for cost leadership firms with a higher percentage of non-executive director and board meetings. Moreover, ARL decreased for firms adopting a differentiation strategy with a higher percentage of non-executive directors. This study contributes to the literature on the potential factors affecting the link between business strategy and the quality of financial reporting by focusing on ARL, which is rarely examined in the literature, especially in emerging markets such as Egypt. The findings of this study are valuable to investors, auditors, corporate management, and other stakeholders, who should consider particular board attributes to better predict ARL and ensure the effective adoption and implementation of business strategies. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
28 pages, 781 KiB  
Article
The Effects of Regulated Auditor Tenure on Opinion Shopping: Evidence from the Korean Market
by Beu Lee, George Gamble, Thomas Noland and Yuping Zhao
J. Risk Financial Manag. 2024, 17(11), 503; https://doi.org/10.3390/jrfm17110503 - 8 Nov 2024
Viewed by 1407
Abstract
We examine the impact of regulated auditor tenure on the shopping for favorable audit reports. We predict that these regulations may affect auditors’ willingness to acquiesce and clients’ incentives to engage in opinion shopping. We draw from the unique Korean setting where both [...] Read more.
We examine the impact of regulated auditor tenure on the shopping for favorable audit reports. We predict that these regulations may affect auditors’ willingness to acquiesce and clients’ incentives to engage in opinion shopping. We draw from the unique Korean setting where both mandatory audit firm retention and mandatory rotation were implemented for all public firms in a staggered manner. Based on hand-collected audit reports, we identify harmful language in explanatory paragraphs. We define favorable audit reports as those with unqualified opinions and without any harmful explanatory language. We find that opinion shopping for favorable audit reports appears to subside after mandatory retention but increases after mandatory rotation, with the positive impact of mandatory retention offset by the negative impact of mandatory rotation. We add to the literature by examining the impact of regulated auditor tenure on opinion shopping and highlighting the potential unintended consequences of these regulatory attempts. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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19 pages, 783 KiB  
Article
CFO Compensation and Audit Fees
by Jing Jiang, Charles T. Fagan and Linda Hughen
J. Risk Financial Manag. 2024, 17(11), 476; https://doi.org/10.3390/jrfm17110476 - 22 Oct 2024
Viewed by 1351
Abstract
Executive compensation contracts may influence financial reporting quality, and the CFO plays a key role in preparing the financial statements. This study examines whether the structure and components of CFO compensation are associated with audit risk as measured by audit fees for a [...] Read more.
Executive compensation contracts may influence financial reporting quality, and the CFO plays a key role in preparing the financial statements. This study examines whether the structure and components of CFO compensation are associated with audit risk as measured by audit fees for a sample of S&P 1500 companies during the period 2012–2022. We find that the percentage of total compensation composed of either stock or options is significant and positively related to audit fees, while non-equity incentive plan compensation is significant and negatively related to audit fees. We also find that the dollar amount of equity compensation is significant and positively related to audit fees, while the dollar amount of non-equity compensation is not related to audit fees. These results suggest that CFO compensation structure is an important factor in the assessment of audit risk, which is important for compensation committees as well as regulators. This is the first study, to our knowledge, that examines the relationship between the dollar amount and composition of CFO compensation and audit fees. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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16 pages, 312 KiB  
Article
Examining the Impact of Vulnerability and the Law of Justice on the IFRS Adoption Decision
by Khandokar Istiak, John Reid Cummings, Robert Forrester and Macy Adams
J. Risk Financial Manag. 2024, 17(9), 417; https://doi.org/10.3390/jrfm17090417 - 20 Sep 2024
Viewed by 990
Abstract
We investigate the impact of vulnerability and the law of justice indicators on the decision to adopt International Financial Reporting Standards (IFRS) by 133 countries. Applying robust Logit and Probit models to 2021 cross-sectional data, we find that the absence of corruption, state [...] Read more.
We investigate the impact of vulnerability and the law of justice indicators on the decision to adopt International Financial Reporting Standards (IFRS) by 133 countries. Applying robust Logit and Probit models to 2021 cross-sectional data, we find that the absence of corruption, state illegitimacy, a well-functioning civil justice system, and insufficient public services are helpful for IFRS adoption. On the other hand, results show that a country’s uneven economic development and human rights violations are detrimental to IFRS adoption. Our research confirms that requiring higher standards for financial and accounting reporting in the media, allocating sufficient budget amounts to support an equitable civil justice system, and coordinating efforts to reduce or eliminate economic inequality may help IFRS adoption. We argue that highlighting the positive benefits of IFRS adoption and the commensurate constructive policy outcomes may add the emphasis needed to convince governmental leaders to move toward IFRS adoption. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
33 pages, 601 KiB  
Article
Would Managers Sacrifice Conservative Financial Reporting to Meet/Beat Market Earnings Expectations?
by Anthony C. Ng, Hua Christine Xin and Bikki Jaggi
J. Risk Financial Manag. 2024, 17(7), 280; https://doi.org/10.3390/jrfm17070280 - 3 Jul 2024
Viewed by 1492
Abstract
Prior studies show that engaging in conservative financial reporting (CON) positively affects earnings quality. However, managers also manage earnings to meet/beat market earnings expectations (MBME). This study asks three questions regarding the earnings that MBME. First, it investigates whether managers are willing to [...] Read more.
Prior studies show that engaging in conservative financial reporting (CON) positively affects earnings quality. However, managers also manage earnings to meet/beat market earnings expectations (MBME). This study asks three questions regarding the earnings that MBME. First, it investigates whether managers are willing to sacrifice CON when adopting strategies to MBME. Second, it tests whether managers prefer to use other earnings management (EM) strategies to MBME instead of sacrificing CON. Third, it tests whether information asymmetry between managers and shareholders affects managers’ decisions to sacrifice CON. Results show that managers are more likely to sacrifice CON to MBME but are less likely to do so if they can manage earnings using accrual-based or real EM. Also, managers are more likely to do so when information asymmetry with shareholders is higher. These findings contribute to the literature by examining the circumstances in which managers would sacrifice CON to MBME. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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17 pages, 726 KiB  
Article
Corporate Income Taxation Dynamics: A Comparative Analysis of Portugal, Germany, Belgium, The Netherlands, and Luxembourg
by Filipa Jesus, José Amorim and Catarina Cepeda
J. Risk Financial Manag. 2024, 17(6), 251; https://doi.org/10.3390/jrfm17060251 - 19 Jun 2024
Cited by 2 | Viewed by 2204
Abstract
This study seeks to undertake a comprehensive analysis and comparison of the corporate income tax systems across select European Union nations, with a specific focus on discerning disparities between the individual income tax (IIT) and corporate income tax (CIT) frameworks prevalent in Portugal, [...] Read more.
This study seeks to undertake a comprehensive analysis and comparison of the corporate income tax systems across select European Union nations, with a specific focus on discerning disparities between the individual income tax (IIT) and corporate income tax (CIT) frameworks prevalent in Portugal, Holland, Belgium, Luxembourg, and Germany. With an institutional theory lens, we applied document analysis to describe the distinctive attributes characterizing each tax regime within the purview of competitive dynamics and fiscal competitiveness. Despite inherent limitations stemming from challenges in accessing tax-related information and potential oversights regarding socio-political determinants, this study underscores the imperative of grasping the intricate interplay between tax imposition levels and broader economic development trajectories. By furnishing valuable insights into prospective reforms pertaining to Portugal’s corporate income tax architecture, this scholarly inquiry significantly enriches our comprehension of tax competitiveness within the overarching framework of the global economic environment. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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17 pages, 379 KiB  
Article
Can Crisis Periods Affect the ESG Reporting Scope? The Portuguese Euronext Entities Case
by Catarina Cepeda
J. Risk Financial Manag. 2024, 17(5), 191; https://doi.org/10.3390/jrfm17050191 - 6 May 2024
Cited by 1 | Viewed by 1842
Abstract
Portuguese companies are increasingly responding to the demand of stakeholders for transparent information about companies’ environmental, social, and governance (ESG) performance by issuing non-financial reports (NFRs). While the number of NFRs published annually has been increasing over the last two decades, their quality [...] Read more.
Portuguese companies are increasingly responding to the demand of stakeholders for transparent information about companies’ environmental, social, and governance (ESG) performance by issuing non-financial reports (NFRs). While the number of NFRs published annually has been increasing over the last two decades, their quality and companies’ ESG performance have been questioned, especially in times of crisis. To address these concerns, several jurisdictions have introduced mandatory NFR rules, such as the European Directive 2014/95/EU. Employing an institutional theory lens, this paper’s research objective is to evaluate whether the last decade’s crises and whether the fact that NFRs became mandatory for certain entities positively affected companies’ activities covered in the ESG reporting scope. We used panel data regression models on 45 listed companies in Portugal during the period 2008–2021. Our results show that the ESG reporting scope is not positively influenced by the transition from NFRs to a mandatory and global financial crisis (GFC). However, the COVID-19 crisis positively affected NFR quality. These results have major implications for practitioners, reflecting the importance of promoting these tools in an organization to improve non-financial performance and companies’ sustainability. Full article
(This article belongs to the Special Issue Financial Reporting and Auditing)
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