Cynthia Jeffrey - Academia.edu (original) (raw)

Papers by Cynthia Jeffrey

Journal of Accounting and Public Policy, 2023

We find that accounting charges for goodwill impairment, which imply a deterioration in the capab... more We find that accounting charges for goodwill impairment, which imply a deterioration in the capabilities of acquired assets to generate expected cash flows, provide meaningful signals concerning CEO under-performance in selecting and conducting acquisitions. We examine 5,990 firms that completed acquisitions and investigate the relation between CEO turnover and goodwill impairment during 2002-2016. The results show that the size of a goodwill impairment charge recognized prior to the departure of a CEO is positively associated with forced, but not voluntary, CEO turnovers. This implies that goodwill impairment provides information before CEO changes occur. We partition goodwill impairment charges into expected and unexpected components, and we find that only the unexpected component of goodwill impairment is informative and associated with forced CEO turnover. Results also show that the association between goodwill impairment and forced CEO turnover varies with audit quality, suggesting the perceived reliability of accounting information influences CEO retention decisions. Given that the FASB may eliminate annual goodwill impairment testing (FASB, 2019a), research addressing the informativeness of goodwill impairment charges is timely.

Research on professional responsibility and ethics in accounting, 2006

Advances in Accounting, Jun 1, 2014

Regulation G requires companies that report non-GAAP or “pro forma” earnings provide a reconcilia... more Regulation G requires companies that report non-GAAP or “pro forma” earnings provide a reconciliation. While nonprofessional investors are a large, heterogeneous population with varying degrees of financial reporting knowledge, previous research treats them as a homogenous group. The study examines how differences in financial reporting knowledge and information viewing behavior affect the influence of reconciled pro forma earnings disclosures on nonprofessional investors' judgments. Lower-knowledge investors appear to incorporate information on differences between GAAP and pro forma earnings in their judgments as long as they view this information in the reconciliation. However, higher-knowledge investors appear to consistently incorporate information on differences between GAAP and pro forma earnings in their judgments regardless of the relative amount of time they spend viewing the reconciliation relative to other disclosures. Our results suggest that knowledge differences influence how nonprofessional investors acquire and use information on differences between GAAP and pro forma earnings.

Accounting education, Dec 12, 2022

Sustainability Accounting, Management and Policy Journal, Aug 16, 2022

PurposeAs more companies choose to disclose corporate social responsibility (CSR) information, it... more PurposeAs more companies choose to disclose corporate social responsibility (CSR) information, it is important to gain an understanding of the quality of disclosures and factors that influence quality. The purpose of this study is to examine the role of culture as a determinant of the quality of voluntary carbon emission disclosures.Design/methodology/approachThis study uses regression analysis to test the influence of culture on the quality of carbon disclosures. The sample of this study comes from companies who voluntarily report to the carbon disclosure project. The authors operationalize the quality of disclosure using the Carbon Disclosure Leadership Index. The authors operationalize cultural values using both Hofstede’s metrics (Hofstede, 1980) and Project GLOBE (House et al., 2004).FindingsThis study predicts and finds a negative relationship between quality of disclosure and high individualism scores. This study also finds that the quality of disclosure is lower for companies located in countries with high power distance scores. The authors find that the quality of disclosure is higher for companies located in countries with gender/assertiveness scores that indicate a higher value on the environment than on the importance of economic growth. While quality is marginally related to uncertainty avoidance using Hofstede's measure, quality is not related to uncertainty avoidance using the Project GLOBE metric. The authors did not find a hypothesized negative significant relationship between quality and long-term orientation.Practical implicationsQuality is a measure of importance to users and regulators of disclosures.Social implicationsNational culture is an important determinant of CSR disclosure quality.Originality/valueThis study extends the previous research by using a metric for quality based on an independent evaluation of disclosures and by the role of culture in a multi-country study.

Journal of Accounting, Auditing & Finance, Oct 1, 2004

Many allege that the accounting profession has failed to adapt to fundamental changes in the busi... more Many allege that the accounting profession has failed to adapt to fundamental changes in the business environment because it has not developed timely guidance for reporting intangible assets. Regulatory attention has also focused on the disclosure companies make with respect to intangible assets. Accounting for the value of intangible assets acquired in a merger transaction is a key component of this issue. Specifically, the Securities and Exchange Commission (SEC) alleged that companies routinely overstated the amount allocated to purchased inprocess research and development (IPR&D) and stated that the SEC would take steps to enforce generally accepted accounting principles (GAAP) to eliminate abuses of GAAP with respect to IPR&D. Others alleged that the SEC was creating GAAP, that they were unfairly singling out certain industries, and that they were unfairly generalizing abuses made by a few firms to the actions of many firms. In other words, competing hypotheses emerged with the first suggesting that the accounting treatment of IPR&D by companies was improper, while the second suggests that the SEC was establishing new accounting standards without carefully considering the issues. This research examines the stock-price reaction for industry groups that are R&D intensive to proposed changes in accounting for IPR&D. We estimate the shareholder wealth effects associated with a series of events that indicate a potential regulatory change in accounting for IPR&D to infer the capital market's assessment as to whether the problem with IPR&D is inappropriate accounting on the part of companies, or inappropriate policy and enforcement on the part of the SEC and the Financial Accounting Standards Board (FASB). The results show that the stock prices of firms in R&D-intensive in-*Iowa State University The authors gratefully acknowledge the helpful comments of participants at the 2004 JAAF/KPMG Foundation conference, an anonymous referee, participants at the Iowa State research workshop, and especially Theodore Sougiannis (discussant) and David Smith. Name /jaaf04/24064_u03 08/27/04 02:26PM Plate # 0-Composite pg 406 # 2 406 JOURNAL OF ACCOUNTING, AUDITING & FINANCE dustries react negatively, on average, to events that increase the probability of new rules restricting IPR&D charges or that increase the expected degree of SEC scrutiny of these charges. However, the FASB announcement that there would be no immediate changes required in accounting for IPR&D produces a positive market reaction. The results support the theory that investors perceive limitations in reporting IPR&D as detrimental to the evaluation of the present value of R&D intensive firms' future cash flows, indicating that the market is more concerned about increased regulation of IPR&D than about the reliability of accounting estimates. Cross-sectional analysis examines four firm-specific variables: firm size, R&D expenses, recent acquisitions, and industry membership. Results indicate that the predicted reactions are strongest for firms with historically high R&D expenses and specifically those in the software industry. Larger firms and those with experience in acquiring firms with current R&D expense are less negatively affected by a call for the financial community to participate in reducing IPR&D charges. Finally, results indicate that firms having the greatest exposure to regulators' concerns have the most negative valuation impact.

Revista internacional Legis de contabilidad & auditoría, 2008

Strategic Finance, 2001

The mismatch between today's "high-tech economy" and the double-entry accounting system has raise... more The mismatch between today's "high-tech economy" and the double-entry accounting system has raised serious questions about the quality of earnings. The Securities and Exchange Commission (SEC) has targeted overly aggressive earnings management, focusing on acquired in-process research and development (IPR&D). Some people are concerned that the SEC crackdown on IPR&D valuations has the potential to slow the pace of mergers and acquisitions significantly, hamper the formation of new companies, and decrease the value of a company's stock. Financial managers on either side of the debate will need a clear understanding of the issues

This research examines in a collectivist culture the influence of cognitive moral development, at... more This research examines in a collectivist culture the influence of cognitive moral development, attitudes toward rule-directed behavior, and the perceived importance of codes of conduct and professional standards on auditor judgments about ethical dilemmas. Taiwanese audit professionals were asked to respond to two ethical dilemmas. The first dilemma concerns a situation in which the auditor is asked to acquiesce to a controller's request to conceal an irregularity. The probability that the auditor's acquiescence is discovered (i.e., the threat of a sanction) was manipulated in this scenario. The second dilemma involves a case in which the auditor has information that a write-down of obsolete inventory will have a material effect on the earnings of a corporation, and must consider whether or not to inform an individual who is heavily invested in the corporation. The individual's ingroup status (i.e., whether the individual was a relative or friend of the auditor) was manipulated in this scenario. Auditors were more likely to agree with violations of ethical standards in the first scenario (concealing a client employee's irregularity) than in the second (revealing confidential information to parties outside the client). In the first scenario, auditors with lower levels of cognitive moral development were less likely to agree with violations of ethical standards when the threat of a sanction was present, while the judgments of those with higher levels of cognitive moral development were not affected by the presence of sanctions. Contrary to expectations, auditors were more likely to agree with violations of ethical standards when the individual involved was a close friend, rather than a relative. In general, as the perceived importance of rules increased, the propensity to violate the Code of Conduct decreased. The Impact of Ethical Development and Cultural Constructs on Auditor Judgments: A Study of Auditors in Taiwan A growing body of evidence suggests that moral development affects both sensitivity to ethical issues and auditor judgments with respect to work-related dilemmas (e.g., Sweeney and

Social Science Research Network, 2019

Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets (FASB 2001b... more Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets (FASB 2001b) affords significant managerial discretion regarding the timing and size of goodwill impairment charges. We investigate whether charges under SFAS 142 reflect economic factors potentially related to fair value and reporting incentive proxies. We find evidence of both, but the influence of earnings management incentives appears stronger, especially after a transitional period. Goodwill impairment charges are strongly related to proxies for both "big bath" and "earnings smoothing" reporting incentives. The results are consistent with the existence of sufficient managerial discretion under SFAS 142 to permit manipulation of impairment charges.

Behavioral Research in Accounting, Aug 1, 2012

Regulation G (SEC 2003b) requires managers to reconcile textual non-GAAP performance measures (i.... more Regulation G (SEC 2003b) requires managers to reconcile textual non-GAAP performance measures (i.e., pro forma disclosures) to GAAP. Graphical disclosures also require reconciliation; however, neither the format nor the placement of the reconciliation is specified. We apply cognitive fit theory to argue that the influence of graphical information presentation formats is contingent on investor type and judgment complexity. Participants in our study viewed a simulated Investor Relations website for a large drug retailer and made judgments regarding current fiscal year earnings performance, earnings potential, and investment amount. We manipulated graphical (GAAP-only versus GAAP and pro forma) and textual (GAAP-only versus pro forma reconciled to GAAP) earnings disclosure content in a 2 3 2 between-participants design. We find that nonprofessional investors' current fiscal year earnings performance, earnings potential, and investment amount judgments are all influenced by graphical displays, which include pro forma as opposed to GAAP-only earnings information. Graphical displays of pro forma earnings information do not influence professional investors' current year earnings performance judgments; however, these displays do influence professional investors' earnings potential and investment amount judgments because they are more complex. Our results suggest a need to further examine the influence of graphical pro forma earnings presentation formats on investor judgments.

Emerald Publishing Limited eBooks, Dec 12, 2022

Table of Contents: 1 Intercorporate Acquisitions and Investments in Other Entities 2 Reporting In... more Table of Contents: 1 Intercorporate Acquisitions and Investments in Other Entities 2 Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with No Differential 3 The Reporting Entity and Consolidation of Less-than-Wholly-Owned Subsidiaries with No Differential 4 Consolidation of Wholly Owned Subsidiaries Acquired at More than Book Value 5 Consolidation of Less-than-Wholly-Owned Subsidiaries Acquired at More than Book Value 6 Intercompany Inventory Transactions 7 Intercompany Transfers of Services and Noncurrent Assets 8 Multinational Accounting: Foreign Currency Transactions and Financial Instruments 9 Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements 10 Partnerships: Formation, Operation, and Changes in Membership 11 Partnerships: Liquidation 12 Governmental Entities: Introduction and General Fund Accounting 13 Governmental Entities: Special Funds and Government-wide Financial Statements

Sustainability Accounting, Management and Policy Journal

Purpose As more companies choose to disclose corporate social responsibility (CSR) information, i... more Purpose As more companies choose to disclose corporate social responsibility (CSR) information, it is important to gain an understanding of the quality of disclosures and factors that influence quality. The purpose of this study is to examine the role of culture as a determinant of the quality of voluntary carbon emission disclosures. Design/methodology/approach This study uses regression analysis to test the influence of culture on the quality of carbon disclosures. The sample of this study comes from companies who voluntarily report to the carbon disclosure project. The authors operationalize the quality of disclosure using the Carbon Disclosure Leadership Index. The authors operationalize cultural values using both Hofstede’s metrics (Hofstede, 1980) and Project GLOBE (House et al., 2004). Findings This study predicts and finds a negative relationship between quality of disclosure and high individualism scores. This study also finds that the quality of disclosure is lower for com...

The International Journal of Accounting, 2015

Energy taxes are intended to internalize the costs of greenhouse gas (GHG) emissions and to incen... more Energy taxes are intended to internalize the costs of greenhouse gas (GHG) emissions and to incentivize reductions in GHG emissions; evaluating whether taxes have the desired effect on emissions is an important research question. A second tool to incentivize GHG reductions is an emissions trading system (ETS). We examine data across countries in the EU from 1996 to 2009 and find that as implicit tax rates on energy increased, carbon intensity of emissions decreased. Further, participation in an ETS also resulted in a significant reduction in overall carbon intensity.

The International Journal of Accounting, 2014

Businesses are often subject to energy taxes that impose a charge on greenhouse gas emissions. Th... more Businesses are often subject to energy taxes that impose a charge on greenhouse gas emissions. Theoretically, energy taxes should motivate business spending on emissions abatement up to the point that, at the margin, the cost of reducing emissions equals the amount of the tax that is avoided. We use European Union (EU) data from 2001 to 2008 to test the hypothesized positive relationship between energy taxes and business spending on abatement initiatives for the protection of ambient air and climate. We find that while overall business spending and business investment expenditures are positively related to energy tax rates, current period expenditures are not related to energy tax rates. Supplemental analyses indicate that the imposition of the EU Emissions Trading Scheme (ETS) in 2005 affected these relationships. In the pre-ETS period, energy taxes were not related to overall business spending or to current period expenditures, but there was a significant positive relationship between energy taxes and investment expenditures. After the ETS was introduced, there was a significant positive relationship between energy tax rates and both overall business spending and business current period abatement expenditures, but the relationship between business investment spending and energy tax rates was not significant.