Review of Accounting and Finance 

About: Review of Accounting and Finance is an academic journal published by Emerald Publishing Limited. The journal publishes majorly in the area(s): Earnings & Earnings management. It has an ISSN identifier of 1475-7702. Over the lifetime, 480 publications have been published receiving 7548 citations. The journal is also known as: Review of accounting and finance.

Voluntary Earnings Disclosures and Corporate Governance: Evidence from France

Abstract: The primary objective of this paper is to study the relationship between voluntary earnings disclosures and a combined set of corporate governance attributes in France. We use binary logit models to check our hypotheses. The results indicate significant negative associations between voluntary earnings disclosures and ownership concentration, and between voluntary earnings disclosures and a unitary leadership structure. The results also show that French firms providing voluntary earnings disclosures are more likely to have higher foreign institutional investor's ownership, and to offer stock option plans for their executives. These findings shed the light on the corporate governance features that enhance incentives for voluntary earnings disclosures and those affecting these incentives under high ownership concentration.

Accounts Manipulation: A Literature Review and Proposed Conceptual Framework

Abstract: Accounts manipulation has been the subject of research, discussion and even controversy in several countries including the USA, Canada, the U.K., Australia, Finland and France. The objective of this paper is to provide a comprehensive review of the literature and propose a conceptual framework for accounts manipulation. This framework is based on the possibility of wealth transfer between the different stake‐holders, and in practice, the target of the manipulation appears generally to be the earnings per share and the debt/equity ratio. The paper also describes the different actors involved and their potential gains and losses. We review the literature on the various techniques of accounts manipulation: earnings management, income smoothing, big bath accounting, creative accounting, and window‐dressing. The various definitions of all these, the main motivations behind their application and the research methodologies used are all examined. This study reveals that all the above techniques have common elements, but there are also important differences between them.

Earnings management and board activity: an additional evidence

Abstract: Purpose – The purpose of this paper is to examine the relation between earnings management behavior and the activity of both the board and audit committee.Design/methodology/approach – Different models to isolate abnormal accruals as a proxy for earnings management are applied to a sample of manufacturing companies.Findings – Earnings management is negatively related to both board and audit committee independence. Such negative relation is stronger when the audit committee is more active. However, this result is not valid for the board activity.Research limitations/implications – Results are limited by the accuracy of the models applied to isolate abnormal accruals.Practical implications – Results may have implications for corporate governance regulations such as board composition, audit committee composition, and their activity.Originality/value – Results of earnings management research are sensitive to the different models suggested in literature to isolate the abnormal accruals.

Corporate diversification: Can the observed diversification discount shed light on management’s choice to diversify or re-focus?

Abstract: Purpose The purpose of this study is to compare two theories that relate the proportion of diversified firms in the economy and the implied discount for diversified firms: the first is a real-options model predicting a positive relationship between the discount and management’s choice to operate a diversified firm; the second is based on catering theory, in which a negative relationship is predicted, as management is attentive to investor preference concerning diversified firms. Design/methodology/approach This study proposes a new aggregate measure of the diversification discount. The authors’ measure allows for decomposition of the discount into firm-level mispricing, industry-level mispricing and long-run fundamental value components. Findings Results support a catering theory of diversification. The discount appears to be the result of firm-level mispricing. Thus, providing an explanation for why, in light of the observed discount, a large number of diversified firms persist. Originality/value To the authors’ knowledge, this is the first study to provide evidence that firm-level mispricing may drive the observed diversification discount.

Artificial neural network vs linear discriminant analysis in credit ratings forecast: A comparative study of prediction performances

Abstract: Purpose – The purpose of this paper is to perform a comparative study of prediction performances of an artificial neutral network (ANN) model against a linear prediction model like a linear discriminant analysis (LDA) with regards to forecasting corporate credit ratings from financial statement data.Design/methodology/approach – The ANN model used in the study is a fully connected back‐propagation model with three layers of neurons. The paper uses a comparative approach whereby two prediction models – one based on ANN and the other based on LDA are developed using identically partitioned data set.Findings – The study found that the ANN model comprehensively outperformed the LDA model in both training and test partitions of the data set. While the LDA model may have been hindered by omitted variables; this actually lends further credence to the ANN model showing that the latter is more robust in dealing with missing data.Research limitations/implications – A possible drawback in the model implementation pr...