Search Results (6)

The chairperson’s statement (CS) has evolved into a key component of corporate reporting, offering an authoritative, high-level summary of a company’s activities, initiatives, operations, financial performance, and achievements over the preceding financial year, along with insights into future outlooks. Recognised for its informative value, the CS is consistently ranked by stakeholders as the most read and most influential section of the integrated report. Despite its importance, the CS is also a platform where corporate management often engages in impression management (IM) to portray a biased and overly positive image of the company. This study conducted a systematic literature review to examine the IM tactics employed within the CS. Based on the findings, an integrative conceptual framework was developed. Identified IM tactics include readability, textual characteristics, the influence of culture, legal systems and capital markets, paratext and intertextuality, the tone of language, forward-looking statements, retrospective sense-making, ambiguous language, the use of photographs and graphs, impersonalisation and evaluative language, and self-serving attributions. The results highlight that the study of IM strategies in CSs represents a rich and relevant research domain that warrants deeper exploration. Given its qualitative complexity and underexplored dimensions, this area offers several promising avenues for future investigation. Full article

This study explores the effect of financial statement comparability on environmental, social, and governance (ESG) performance. Comparability is a qualitative characteristic that enhances the usefulness of accounting information, as emphasized in the conceptual framework of accounting standards. Reporting accounting information with high comparability reduces the cost of obtaining information for users of financial statements, thereby enabling them to make decisions more efficiently. However, increased comparability of financial statements may lead managers to avoid investments that do not directly and rapidly enhance corporate value. In the context of ESG, this behavior could lead to a reduction in ESG investments, thereby lowering overall ESG performance. This study empirically investigates this hypothesis by analyzing data from listed firms in Korea. The analysis reveals a negative relationship between the comparability of financial statements and ESG performance. When breaking down ESG performance into individual components, the environmental (E) and social (S) factors show a negative relationship with comparability, while no significant relationship is observed with the governance (G) factor. The results remain consistent across various additional tests, including the use of alternative comparability and ESG proxies, as well as when employing firm fixed effects models. The findings of this study highlight the potential adverse effects of financial statement comparability on ESG performance. These results suggest that while comparability facilitates better decision-making through enhanced information efficiency, it may inadvertently discourage managers from engaging in ESG investments, thereby negatively impacting a company’s sustainability. Full article

The purpose of this article is to assess the comparability of financial information presented in the annual statements of insurance companies by means of the NiCE (Nijmegen Centre for Economics) index of financial report quality assessment and suggest some directions for changes to the assessment of comparability of insurance companies’ financial reporting. The selection of cases for the research sample was intentional. Financial reports were chosen from 8 insurance companies, whose share measured by the value of their assets accounts for more than 30% of the EU market. Financial statements for three years (2019, 2020, 2021) were obtained and assessed in each case. The NiCE index of financial report quality assessment was used, and utilised first to assess the qualitative characteristics of financial reporting from entities other than financial institutions. The study found a high comparability in insurance companies’ financial reporting. It was also established that the method of assessment is not free from defects, and some improvements were suggested. The results could serve insurance company stakeholders by indicating the current state and some directions for change regarding the comparability of financial statements. The stakeholders require reliable data, mainly regarding the goals on Agenda 2030. Understanding and analysing sustainability goals for entities such as insurance companies without analysing their financial situation is impossible. This research improves the state of the art in the assessment of financial reporting quality and fills a gap in the verification of the comparability of insurance companies’ financial information. The research undertaken should also be considered important from the point of view of sustainability, as the quality of information is an important element in decision-making and forms the basis for the preparation of non-financial information and ESG (environment, social, governance) reports. Full article

To build trust, SMEs must pass on information as clearly as possible, which can be achieved through a transparent financial reporting process. The article aims to study the impact of six accounting quality risk indicators in audit risk assessment from SME audit reports in EU countries, comparing the findings with the analysis of the same indicators at CEECs level. The qualitative research methodology consists of a descriptive study of the risks in the audit reports, emphasizing their types and connection with the company’s characteristics. The study is based on a sample of 443 SMEs listed on the European stock markets and included in the Audit Analytics database, an online platform with information from the company’s financial statements and audit reports. According to the results, the “Audit Fees-Significant Non-Audit Fees” indicator had the highest accounting quality risk impact on SMEs audit reports in the EU. In contrast, for the CEECs companies, the “Audit Fees–Significant Change” index had a more significant impact on the audit reports. The study’s results showed an average trend of 15–16 reported situations per year, with a substantial increase over recent years for CEECs. The main conclusion from the study is that the uncertainties reported by the auditors depend more on the company’s field of activity and how it is managed; therefore, the SME sector should be coordinated according to the accounting regulations regarding the principles and the content of the financial reports. Considering the fast evolution of risks that may affect the audit reports of a small company and the fact that this topic has yet to be thoroughly researched, we find it relevant. The contribution of this article consists of a systematic analysis of the audit risk matrix completing the existing literature, which is why the field can be discussed more widely. Full article

The expansion of financial markets has enabled individuals to invest in a variety of securities and financial instruments. Consequently, behavioral finance has shed light on the characteristics and psychological processes that influence the investment intentions and decisions of investors. We performed a systematic review of the recent literature on the key elements that influence the behavioral intentions and investment decisions of individual investors. In combination with bibliometric and weight analysis, this review aims to propose a comprehensive approach to present quantitative and qualitative analyses of the rising elements influencing investors’ intentions and behaviors in financial investment products. Using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) statement, this work comprises a review of 28 articles published in Web of Science and Scopus databases between 2016 and 2021. The findings identify six underlying themes of investor behavior determined using content: (1) personal factors, (2) social factors, (3) market information, (4) firm-specific factors, (5) product-related factors, and (6) demography. The future research agenda is highlighted based on the Theories, Constructs, Contexts, and Methods framework. The findings provide insights for both theoretical and practical application for corporations, financial institutions, and policy makers in understanding investors’ behavior so as to strengthen the financial industry and economy. Full article

This article develops a conceptual framework, based on a comprehensive literature review, to address illicit financial flows (IFFs), characterised by the illegal move of monies or capital across country borders. IFFs compromise transparency through complex transactions and incur harmful effects for both developing and developed economies. Financial opacity creates a conducive environment for IFFs to flourish, as a challenge to good financial practices. Following an interpretive philosophy, an inductive research approach, qualitative methodological choice, cross-sectional time horizon all through data collection through review of scholarly literature, and framework were developed to analyse the said IFFs. Our framework encourages good corporate governance and provides insights, as well as the identification of possible characteristics of IFFs perpetuated in the financial statements of entities, which would discourage entities to engage in IFFs. Specifically, practitioners should be able to identify characteristics of IFFs and use the framework to address these. Within the finance dimension, it is important to study the specific mechanisms regarding how IFFs may damage an entity’s reputation, as well as their going concern. In future work, we shall enhance the framework through interviews with auditors, followed by a validation of the enhanced framework through a focus group. The utility of the final framework can be tested through case studies in the industry to analyse IFFs. Full article