IMFI Papers Coming Soon
This section contains information about articles which are already reviewed, accepted and waiting for publication in next issues of the journal.
Integration of enterprise risk management and management control system: based on a case study
Ilhang Shin, Ph.D., Assistant Professor of Accounting, Division of Business Administration, Chonbuk National University, Korea
Abstract. Enterprise risk management (ERM) has emerged as a paradigm for managing various kinds of risks faced by organizations, and the trend is to focus on its role in improving risk management and ultimately enterprise value. ERM is designed to improve the board and executives' oversight of risks. This paper intends to discuss concepts and methodological issues of ERM, which is considered an extension of internal audit function. We study the case of company A in which ERM has been implemented as a means to integrate with management control and to increase firm value by monitoring its subsidiaries. This paper provides insight on the process how group-level internal auditor can use ERM as a tool to manage risk of subsidiaries, thereby filling the gap between academic research and practice. This successful ERM adoption case can be used as a guideline for other organizations, which plan to adopt ERM in the future with reduced costs and improved processes.
Evaluation of empirical attributes for credit risk forecasting from numerical data
Dimitras Augustinos, School of Social Science, Hellenic Open University, Patra, Greece
Abstract. In this research, we proposed a new method to evaluate borrowers' credit risk and quality of financial statements information provided. We use qualitative and quantitative criteria to measure the quality and the reliability of its credit customers. Under this statement, we evaluate 35 features that are empirically utilized for forecasting the borrowers' credit behavior of a Greek Bank. These features are initially selected according to universally accepted criteria. A data set of historical data was collected and an extensive data analysis is performed by using non parametric models. Our analysis revealed that building simplified model by using only three out of the thirty five initially selected features one can achieve the same or slightly better forecasting accuracy when compared to the one achieved by the model uses all the initial features. Also, experimentally verified claim that universally accepted criteria can't be globally used to achieve optimal results is discussed.
Big 4 auditing, earnings manipulation and earnings conservatism: evidence from an emerging market
Thabang Mokoaleli-Mokoteli, Wits Business School, Johannesburg, South Africa
Abstract. This study focuses on South African listed companies and investigates the relation between big 4 auditing, earnings management and earnings conservatism. The findings of this study show that companies that are audited by a big 4 auditor tend to recognize large losses more timely and to engage less in earnings management. This study has found that conditional conservatism is positively related to big 4 auditing. The findings report that the conditional form of conservatism is negatively related to unconditional conservatism. The study provides evidence of asymmetric disclosure of losses for firms with high leverage. The same holds for high quality disclosers that display bad news. The findings also show that firms that are in a growth phase tend to provide less conservative information in order to influence their growth prospects. The findings, in general, support the notion that the new companies' Act in South Africa and the King III are effective corporate governance tools and the observed cases of corporate failure may be due to other factors, including management hubris.
The effect of Dow Jones Sustainability Index on Consumer Sentiment Index
Nikolaos Sariannidis, Associate Professor, Western Macedonia University of Applied Sciences, Department of Accounting and Finance, Kozani, Greece
Wealth effects of delistings announcements in Europe
Apostolos Dasilas, Department of Applied Informatics, University of Macedonia, Thessaloniki, Greece
Abstract. Using a European dataset of 478 delistings, we investigate the role of corporate governance in the short-term performance of European stocks around a delisting decision. In order to achieve this, we utilize the event study methodology in multiple contexts and cross-sectional regression analysis. This is particularly evident in high shareholder protection environments in a finding related with investors' perception of the security they experience in the particular market, as well as the afterlife of the under delisting stock and the potential of value creation or destruction. In high investor protection environments, the delisting event causes negative abnormal returns both for voluntary and involuntary delistings. We conjecture that these delistings whether referring to LBOs, delistings from secondary listings or BOSOs, are strategic decisions and in this respect pre-delisting shareholders acknowledge that there is life after delisting. Under low investor protection, the above holds only for involuntary ones. Companies failing to meet capital market criteria and voluntary delistings appear to have significantly smaller losses than under bankruptcy firms, on average, on the eve of the delisting event. These abnormal returns are basically affected by the firms' financial soundness and the corporate governance level pertaining in the host market. Cross-sectional regression analysis shows also the inverse relationship between the degree of governance structures and market reaction to delistings announcements.