The Journal of Accounting and Finance (JAF) is dedicated to the advancement and dissemination of research across all the leading fields of financial inquiry by publishing, through a blind, refereed process, ongoing results of research in accordance with international scientific or scholarly standards. Articles are written by business leaders, policy analysts and active researchers for an audience of specialists, practitioners and students in all areas related to financial and accounting in business and education. Studies reflecting issues concerning budgeting, taxation, process, investments, regulatory procedures, and business financial analysis are suitable themes. JAF also covers theoretical and empirical analysis relating to financial reporting, asset pricing, financial markets and institutions, corporate finance, and corporate governance. Articles of regional interest are welcome, especially those dealing with lessons that may be applied in other regions around the world.
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Strategies for Implementing Mandatory Environmental Disclosures: Lessons From Europe
The introduction of mandatory environmental disclosure laws has created significant uncertainty for numerous American companies. Firms may be compelled to provide assured environmental reports through state and international legislation. This study aims to explore measures to effectively disclose audited environmental information through a systematic review. The practical recommendations propose that mandatory environmental disclosures should be integrated as a strategic objective, the board of directors should oversee the implementation of disclosure requirements, organizational culture and leadership should act as catalysts for success, assurance providers should adopt a consultative approach in their processes, and environmental performance should be evaluated.
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Corporate Governance and Market Performance of Seasoned Equity Offerings: Evidence From Chinese Listed A-Share Companies
This study examines how corporate governance affects the market performance of seasoned equity offerings (SEOs) in Chinese A-share firms from 1998 to 2001. Using a sample of 458 SEOs, we analyze the role of governance attributes, including state ownership, board structure, independence, and CEO duality, on both short-term announcement effects and long-term stock returns. Results show that state ownership and CEO duality are negatively associated with long-run performance, while board independence enhances outcomes. New share issues elicit more favorable short-term responses than rights offerings. The findings highlight the importance of internal governance mechanisms in influencing investor reactions and capital market performance in emerging economies.
Toward an Islamic Cryptocurrency: A Proposed Halal Coin
Since its inception in 2009, cryptocurrencies have been a subject of debate in literature. In the general literature, the debate is mainly about the legality and application of these currencies while in Islamic literature, the debate is about its compliance with Sharia rules and directions. The primary objective of this study was to analyze current cryptocurrencies using a novel methodology and propose a new Islamic cryptocurrency, called “Halal Coin”. To achieve the objectives of this study, a qualitative research method was followed by analyzing how the included cryptocurrencies work, analyzing some of its data for the period from January 1, 2023 to May 31,2025, and determining the characteristics of the proposed coin. Data used in this study were analyzed using descriptive statistics and the measure of “value at risk”. The results revealed that none of the current cryptocurrencies are Sharia-compliant, and the proposed Halal coin is characterized by 15 attributes, including being accessible to all people, serving as a unit of account, and being free from high volatility.
Exploring the Link Between Fun and Engagement in Financial Literacy
This study examines the effectiveness of financial literacy event engagement by extending prior literature findings that indicate lower levels of financial literacy among non-white student populations. The authors created a campus-wide financial literacy fair, collaborating with the university's branding department to theme the event accordingly. At the fair, students were required to participate in a panel session, where they could ask industry experts questions about financial decisions, and then play financial-themed games led by their peers. Students earned tickets for prizes and free food by completing activities. Students could choose to opt in to having their demographic information accessed so the authors could analyze the demographics of the participants. Working with the institutional research office, the authors examined the demographics of student participants compared to the overall student population. The results suggest that incorporating fun into financial literacy event branding may attract populations in greater need of the content and resources provided.
Related Party Transactions as a Governance Risk: Implications for the Cost of Capital
This study examines the impact of related party transactions (RPTs) on the cost of capital among KOSPI and KOSDAQ-listed firms in South Korea. Using 14,277 firm-year observations from 2012 to 2020, we employ multivariate regression analysis to examine the relationship between RPT intensity and the weighted average cost of capital (WACC). We find a robust and positive association between RPT intensity and WACC, suggesting that capital markets perceive extensive intra-group transactions as a governance risk and a source of increased information asymmetry. This perception leads to a higher rate of returns by investors, thereby increasing the cost of both equity and debt financing. Our findings contribute to the literature on corporate governance and capital market efficiency by highlighting the role of RPTs as a key determinant of financing costs. These insights underscore the importance of implementing stronger disclosure requirements and enhancing monitoring mechanisms to mitigate potential agency problems arising from intra-group transactions in emerging markets.
Do Investors Follow Their Values? Impact Investment Behavior and Sustainable Development Goals
This study examines the behavioral determinants of investment decisions, with a focus on value alignment and congruence with the Sustainable Development Goals (SDGs). Drawing on behavioral finance theory, this study explores how pro-environmental and prosocial orientations influence individuals’ willingness to pay (WTP) for social- or pro-environmental stocks. Using hypothetical investment scenarios, the study reveals that SDG-alignment in-creases investment willingness. This underscores the salience of value-congruent framing over abstract value-led orientation. The findings challenge the homo economicus paradigm and affirm bounded rationality as a more suitable model for impact investment behavior. The study contributes to sustainable finance literature by highlighting the role of value alignment and SDG-based framing. These insights support the design of more effective impact investment products and communication strategies tailored to the profiles of ethical investors.
Cash Flow Volatility and Capital Structure in Asia
This paper aims to investigate the relationship between cash flow volatility and capital structure policy for firms in developing Asian economies. The relationship is then examined, with all firms separated based on their economic development, and again based on prior debt levels and operating cash flows. Higher levels of cash flow volatility are positively related to the amount of debt in the capital structure. The positive relationship exists only among firms in developing economies and firms with higher historic leverage and positive operating cash flows.
Sustainability Reporting: Format and Disclosure Guidance
Sustainability reporting continues to grow in popularity but the lack of standardization in its reporting guidance is a challenge. This archival analysis examines the various formats available for reporting organizational sustainability, highlighting both commonalities and differences. Although no U.S. guidance has been successfully adopted, this does not deter companies from using whatever format meets their organizational reporting needs. The genesis of various sustainability nonfinancial reporting presentations is provided with a discussion of their format and content. Reporting goals, disclosure guidance and auditor review proposals are presented together with the status of U S sustainability reporting guidelines and pending accounting rules for environmental credits.
Artificial Intelligence in Forensic Accounting: A Literature Review
This literature review examines the transformative impact of artificial intelligence (AI) on forensic accounting. Drawing from recent academic research, industry reports, and global case studies, the review traces the historical evolution of AI applications—from early expert systems to modern machine learning and natural language processing techniques. Key challenges, such as data quality, model explainability, ethical concerns, and regulatory gaps, are examined alongside the opportunities that AI presents, including improved detection accuracy, real-time monitoring, and the ability to analyze unstructured data. The review emphasizes the synergistic relationship between human expertise and AI, advocating for hybrid approaches that enhance investigative efficiency and objectivity. It also identifies future research directions, including explainable AI, blockchain analytics, continuous auditing, and the integration of advanced techniques such as federated learning. This review offers scholars and practitioners a comprehensive and up-to-date understanding of how AI is transforming forensic accounting practices globally.
The Synergy Between Internal Control Mechanisms and Audit Functions for Optimal Financial Outcomes
Internal control systems and audit functions are critical governance mechanisms that significantly enhance financial performance, transparency, and accountability. Their synergy is vital for compliance and operational efficiency, though their combined impact, especially in developing economies, remains underexplored. This quantitative, cross-sectional study examined these effects using data from 138 participants via structured questionnaires based on the COSO framework, analyzed through regression and exploratory factor analysis. Findings indicate that internal controls substantially boost financial performance through transparency and compliance. While internal audits showed a limited direct impact, their interaction with internal controls amplified their collective effect on financial outcomes. The study underscores the importance of aligning these mechanisms, highlighting their synergistic role in driving financial performance. Practical recommendations include fostering integration between these systems, investing in technology, and strengthening regulatory frameworks to enhance governance practices.
Women on the Board (WOB) have been increasing both in the United States and Europe and much of the research to date is not U.S. focused. This paper studies the impacts of WOB on Return on Average Assets (ROAA). We employ different panel data models to investigate the impacts on 145 S&P 500 CEO-only board companies between 2016 and 2019. CEO-only board companies have a type of board that developed as a result of the Sarbanes-Oxley Act of 2002 to be a fully independent board other than the CEO. Our results illustrate positive impacts of WOB on ROAA when controlling for sector, time and state fixed effects. Moreover, interest rate has a positive and statistically significant impact on ROAA. Additionally, we study the cultural impacts of Red vs. Blue states. Our results support a positive impact of WOB on ROAA in favor of Blue states.
Public Auditing and Cultural Policy: The Influence of Financial Oversight on Political Justifications
This paper investigates the impact of public financial control on cultural policy, a relationship often assumed but understudied. Focusing on Mecklenburg-Western Pomerania, Germany (1993-2011), it examines how financial oversight by the regional Court of Auditors (LRH MV) influenced justifications for theatre and orchestra policy. Building on the idea that auditing shapes its subjects, the study analyzes how decision-makers adapted their arguments in response to LRH MV observations. Using interpretive policy research and argumentation theory, the study analyzes 96 documents, including LRH MV reports. Findings reveal the LRH MV’s indirect but decisive role, with governments aligning arguments with the Court’s recommendations. The LRH MV acted not only as a supervisor but also as a knowledge producer, providing frameworks for reform. This demonstrates how financial oversight shapes cultural policy, contributing to cultural economics and offering insights into arts sector governance. The methodology proves robust for assessing the broader implications of financial control.
How Do Civil Law Legal Institutions React to Ex-Ante Transaction Costs? A Focus on Italian Regulation
This paper aims to investigate the role of contracts and property as fundamental tools for achieving market efficiency, analyzed through the lens of Law and Economics. The contract is presented as a tool for optimal resources allocation, where the transfer of goods and rights enhances individual and social welfare. However, transaction costs, particularly ex-ante costs, often hinder the full potential of contractual arrangements, leading to an inefficient use of resources. The contribution examines how Italian legal Institutions address the ex-ante obstacles, aiming to create a regulatory environment that reduces transaction costs and supports market efficiency. Additionally, the analysis highlights mechanisms such as third-party arbitration, the contract for a person to be named and pre-contractual liability, all intended to foster balanced, cooperative exchanges that drive economic value. This interdisciplinary approach underscores the complementary nature of legal and economic perspectives, advocating for a legislative model that aligns private law institutions with their inherent economic functions to support market dynamics.
Do U.S. Multinational Corporations Utilize Tax Avoidance Strategy to Meet and Beat Multiple Earnings Goals?
Experimental psychology literature (Wang and Johnson, 2012) suggests that under risky conditions, when multiple goals coexist, people tend to meet/beat all. Multinational corporations (MNCs) are different in tax structures between home countries and host countries. They tend to use tax planning strategies to boost their earnings through reduced tax liability (Lee et al., 2015). Prior literature documents that MNCs use different financial practices to manipulate earnings than non-MNCs (Contractor, 2016). Using a panel data set from 1987 to 2015, we hypothesize and find that U.S. MNCs tend to apply more aggressive tax planning to meet/beat multiple earnings benchmarks (MMB). Specifically, as U.S. MNCs MMB, they do not apply as much other earnings/expectations management mechanisms as non-U.S. MNCs, but they do exhibit significant evidence of tax avoidance with much lower effective tax rates. The findings of this study contribute to research topics in tax avoidance strategy and earnings management. The results and discussions of this study have practical implications to investors, managers, auditors, and tax regulators.
This study investigates the relationship between Sales Order Backlog and firm-level Research and Development (R&D) investment, employing Ordinary Least Squares (OLS) regression on a robust dataset of U.S. firms spanning from 2011 to 2021. We discover a statistically significant positive correlation between Sales Order Backlog and R&D expenditure, indicating that firms with a higher sales order backlog tend to allocate more resources to R&D. This research enriches the accounting discourse by shedding light on the strategic implications of sales order backlog for R&D investment. Specifically, it advances our understanding of the sales order backlog's role in corporate financial strategy, an area that remains relatively unexplored in accounting literature. Our findings underscore the importance of sales order backlog as a predictive indicator for future R&D activities, offering valuable insights for both practitioners and scholars interested in the dynamics of corporate investment behavior.
Exploring Gamification Approaches in Accounting Courses: A Systematic Review
This systematic review synthesizes recent research about gamification in accounting education, where student disengagement and motivational obstacles frequently hinder learning. This analysis synthesizes empirical research demonstrating how gamified elements can improve student motivation, engagement, and, in numerous instances, learning results. Self-Determination Theory and Problem-Based Learning frameworks explain gamification's ability to meet students' demands for autonomy, competence, and relatedness within accounting contexts. Although most research indicates favorable effects on exam scores, problem-solving abilities, and enjoyment, conflicting results highlight the necessity for meticulous design and alignment with learning objectives. Additionally, resource limitations, technical obstacles, and student diversity present tangible impediments to the efficient implementation of gamification. This paper outlines the primary advantages of gamified accounting education, specifies circumstances in which gamification may not enhance performance, and offers suggestions to implement or improve game-based methodologies. This study identifies critical deficiencies, providing a framework to direct future research and improve the educational efficacy of gamification in accounting instruction.
The Impact of the Country of Origin on the Underpricing of ADR IPO in the U.S. Equity Markets
This study examines the impact of the country of origin on the underpricing of American Depositary Receipts (ADRs) Initial Public Offerings (IPOs) in the U.S. equity markets from 2003 to 2023. Analyzing 161 ADR IPOs from 28 countries, the research finds that ADRs from countries with higher country risk premiums are associated with lower underpricing. GDP correlation and Rule of Law difference have no significant impact on underpricing, whereas longer lock-up periods correlate with higher underpricing, signaling higher quality. Countries such as China, the UK, Ireland, Germany, Israel, and Mexico exhibit high underpricing, while Japan, South Korea, and Singapore show low or negative underpricing. The study concluded that investors are willing to pay more for better protection against financial risk but will not pay more for diversification potential.
Evaluating the Risk and Return of an Initially Delta-Hedged Portfolio
As assumed in the Black Scholes Option Pricing Model, a hedged portfolio consisting of longing delta number of shares of stock and shorting one call option is riskless because the price changes in these two positions offset one another. Such portfolio is a hedged portfolio whose return should be the riskless rate. However, this is true only if the hedged portfolio is continuously rebalanced or adjusted according to price changes. In the real world, such dynamic hedging is rarely implemented because the transaction cost of continuous rebalancing would exceed the benefit of keeping the portfolio riskless. This paper examines the risk and return of such portfolio when it is hedged initially according to delta but is not rebalanced afterward. The result shows that such portfolio, though not riskless, achieves a superior reward to risk ratio than pure stock investment.
The Application and Future of the U.S. Global Intangible Low-Taxed Income Tax
This paper is prepared to look at a unique tax provision in the United States 2017 Tax Act (Tax Cuts and Jobs Act of 2017) dealing with foreign earnings of United States multinational firms engaged in business activities in many countries worldwide. This act dramatically changed the tax status of typical foreign earnings of United States multinational corporations as far as United States taxation is concerned. However, in light of this dramatic change, the unique tax provision that was also added in the United States tax law in the 2017 Tax Act that this article addresses tries to ensure that that dramatic change in the tax status of typical foreign earnings of United States multinational corporations did not go too far. This paper looks at this unique tax provision in terms of its purpose, application and, as much as possible, its future in United States tax laws.
Non-Linearity in Corporate Finance Studies: Bank Size Matters When It Comes to Leverage Components
We propose a regression-based procedure to account for non-linearity, while maintaining robustness to multicollinearity and endogeneity. To illustrate our method, we focus on capital structure, a fundamental topic in corporate finance, and examine excess, non-deposit and short-term components of leverage. We model those leverage measures as functions of competition, diversification, and liquidity, interacting with bank size. Our analysis begins with fully specified second-order models for each determinant in combination with bank size, revealing significant non-linear effects. To address potential multicollinearity among second-order terms, we apply lasso regression for variable selection and initial coefficient estimation. We then augment the selected models with bank and time fixed effects to control for unobserved heterogeneity and address endogeneity concerns. Our findings indicate that linear specifications often misattribute significance to less relevant variables by failing to account for underlying non-linearities and interactions. This omission leads to biased estimates and distorted interpretations. Our approach provides a practical and reliable method for obtaining unbiased and interpretable estimates in the presence of complex variable relationships.
Entrepreneurial Intentions: What Factors Impact The High School’s Students? Marrakech, Morocco
This study seeks to highlight the explanatory factors of the High schools’students’ entrepreneurial intention in Marrakech in order to identify the determinants that influence young people to become interested in entrepreneurship. A study was conducted on a random sample of 220 students from different high schools and different fields (Business, Engineering, health sciences). Information collection for the surveys was carried out by questionnaire. The information collected and processed made it possible to test the significant links between the variables of the hypotheses formulated. Thus, through the frequency, we detected the presence of entrepreneurial intention among the individuals questioned. Then, many factors influencing this students’ entrepreneurial intention were tested.
Performance Insights of Leading Card Issuers: An Analysis of Accounting Practices, Financial Metrics, and Corporate Responsibility Amid Economic Disruption
This study provides a comparative analysis of the financial performance, operational efficiency, and sustainability practices of three leading payment card companies. The analysis spans the pre-COVID growth phase, the economic turmoil of 2020, and the recovery that followed in the post-pandemic period. The findings reveal that Visa and Mastercard, with their transaction-based, asset-light models, demonstrated superior resilience, financial stability, and adaptability. In contrast, American Express’s diversified, credit-exposed model resulted in higher operational costs and liquidity constraints during periods of market stress. This study emphasizes how agile strategies support stability, advancing research on financial agility and crisis management in the financial sector.
The Role of Trade, R&D and Human Capital in Growth: A Story of the Chess Piece Fallacy
An eye-opening econometric analysis of real GDP growth from 1980 to 2020 reveals the divergent and dynamic impacts of R&D activities and human capital on the Indian and Chinese growth regimes. Similar in population quantum, GDP and growth patterns before 1980, the two countries parted ways. China grew its economy by an average of 10% annually between 1980 and 2020, reaching a tremendous valuation of 10 trillion USD. In contrast, India experienced several economic downturns and reached an economic valuation of 3 trillion USD following growth at an average rate of 6% annually after 1990. In this study, the endogenous growth model is applied to explain the discrepancy between these figures via a comparison of the tremendous advances of each country. The ARDL-bounds approach to cointegration, followed by the Toda– Yamamoto test for causality, reveals that R&D and human capital contributed greatly to propelling growth in China, while in India, GDP growth was influenced by a nonsignificant, negative coefficient of human capital and a lower contribution from R&D. India missed an opportunity for growth because of policy restrictions on the creation of high-quality human capital, which downscaled its prospects via lower labor productivity. Moreover, under Deng Xiaoping's leadership, China developed a successful policy framework nurturing human and intellectual capital.
News Vacancy and Stock Movement: Uncovering Trading Opportunities With Idiosyncratic Price Changes
This study examines whether stock price movements without accompanying news revert to prior levels. A portion of stock price volatility cannot be directly attributed to macroeconomic announcements, firm disclosures, or news reports. Instead, many fluctuations appear idiosyncratic—driven by firm-specific trading dynamics, investor sentiment, or liquidity imbalances rather than fundamental value changes. Using daily stock prices and scraped news data, this research quantifies trading opportunities arising from these idiosyncratic price shifts. Our results show that price movements accompanied by new information exhibit stronger reversals than those without news, particularly following large gains. Stocks experiencing sudden increases without news sustain elevated prices longer before correcting, whereas declines exhibit weaker, less predictable reversals. These results suggest that public information plays a critical role in market efficiency by shaping investor reactions and price adjustments. By highlighting the role of news— or its absence—in price discovery, this study deepens our understanding of short-term market inefficiencies and provides insights for both academic research and trading strategies.
The “Blowout Effect”: An Analysis of the Financial Impact of a Near Catastrophic Aviation Event
On January 5, 2024, a door plug blew out of an Alaska Airlines flight midair, leaving a hole the size of an emergency exit in the hull of the plane. Boeing and Spirit AeroSystems were found jointly responsible for this mishap, which grounded hundreds of flights. This situation raises an important question about which firms in the commercial aviation industry suffer the most from near catastrophes. This paper examines the “Blowout Effect” of this disaster on the commercial aviation industry and on two sectors: (i) aircraft manufacturers and (ii) airline companies. We use an event study methodology to analyze the returns of 19 aviation firms. The “Blowout Effect” did negatively impact share values across the commercial aviation industry, with a nearly 5% loss in company value. Additionally, every airline company experienced a financial loss, even though none of them were assessed any fault in the near catastrophic event. We find the 19 aviation firms cumulatively lost $27 billion of market capitalization which we attribute to the “Blowout Effect.”
Effects of COVID-19 on Financial Reporting in the U.S. Life Science Industry
The COVID-19 pandemic posed unprecedented challenges for financial reporting, especially in the U.S. life sciences industry. This study analyzes how pharmaceutical, biotechnology, and medical device companies navigated financial disclosure obligations from 2019 to 2022 during the pandemic. We examine SEC filings (10-Ks and 10-Qs) and corporate disclosures to identify changes in risk factor reporting, liquidity management, corporate governance, internal controls, non-GAAP measures, critical accounting judgments, and potential earnings management. The findings reveal that life science firms responded with greater transparency regarding pandemic risks, proactive capital management (including substantial debt and equity financing in 2020), governance adaptations (more frequent board oversight and virtual meetings), maintained internal controls despite remote work, and cautious use of non-GAAP adjustments (most firms did not treat COVID-19 costs as one-time exclusions). Additionally, there was a trend of taking significant discretionary write-offs in 2020, with reversals noted in 2021. These actions indicate that, even amidst extreme uncertainty, companies aimed to uphold the integrity of financial reporting and meet stakeholder information needs. The industry’s experience offers valuable insights for enhancing the resilience of financial reporting in future crises.
Fintechs and Banking: A Note on Neobank Risks
The fintech industry has made rapid inroads into banking in the last several years. Pundits tout that it will improve efficiencies while giving consumers broader choices in developing their banking portfolios. Others posit that it will erode bank profitability and that its success is tied to monetary policy. Our research focuses on an overlooked aspect of fintech: neobanks, sometimes called a challenger bank, that allow customer access to apps and software that streamline online and mobile banking. This paper will cover a brief history of fintechs, fintech advantages, and finally, discuss some of the risks of neobanking.
Humor in the Classroom: An Introvert’s Perspective and Implementation
Being humorous in the classroom seems particularly challenging to an introvert who needs time alone and is usually not perceived as outgoing. We offer the experience of an introverted finance faculty member on using humor in the classroom over the past two decades. We emphasize the weaknesses and strengths of an introvert, and how they shape the humor strategies and attempts of the faculty member. We provide examples of “educational” jokes that the faculty member used in his attempts to make it more interesting in the classroom and to engage students. Student feedback on the attempted humor is overwhelmingly positive.
Valuation Considerations of Stock Based Compensation: A Case Study of Semiconductor Firms
Equity research analysts and investors remain divided on the treatment of stock-based compensation (SBC) in firm valuation, particularly in discounted cash flow (DCF) and earnings multiples techniques. Many firms and analysts exclude SBC, viewing it as a non-cash expense, while others argue this leads to overvaluation. SBC usage is especially high in the tech sector. This study examines five large semiconductor firms, analyzing SBC levels, its treatment in adjusted earnings, and its impact on share dilution, valuation multiples, and free cash flow calculations. Findings indicate that SBC treatment significantly affects valuation, particularly within the semiconductor industry.
Historical Development of Taxation From Ancient Times to Modern Day: Implications for the Future
This study examines the history of taxation, specifically how taxation was used over the centuries by major world civilizations. This study provides a comprehensive review of past and more recent studies, spanning the full length of tax history using a quasi-empirical approach, thereby offering a unique contribution to the academic literature. Theoretical foundations include Adam Smith’s Canons of Taxation, benefit theory, ability theory, and tax assignment theory. Implications are drawn for the future of taxation. Findings suggest that various forms of taxation played a critical role in amassing resources necessary to build and sustain world empires and republics. Implications are that this will continue. Excessive taxation was included as a factor in the downfall of some empires. World history might have taken a notably different direction without the revenues accumulated via taxation. Results will interest tax policy makers, academic tax researchers, law professors, and others concerned with the historicity of taxation. Results can also be used by accounting and legal educators.