Browsing by Author "Bhuiyan MBU"

Now showing 1 - 9 of 9
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    Audit report lag and key audit matters in Australia
    (Palgrave Macmillan, 2024-06-27) Rahaman MM; Bhuiyan MBU
    We aim to investigate the impact of mandatory key audit matters (KAMs) disclosure on audit report lag (ARL). Additionally, we examine the potential moderating effect of firm size on the association between KAMs and ARL. We conduct Ordinary Least Square regression analyses using a sample of 602 firm-year observations from 2018 to 2020. Our findings indicate that the disclosure of KAMs is associated with a reduction in firm ARL. Furthermore, we find that the association between KAMs and ARL is particularly pronounced in large firms, suggesting that the impact of KAMs disclosure on ARL is more significant in this context. Additionally, our research reveals that the negative association between KAMs disclosure and ARL becomes more prominent when the education level of the audit committee chair is higher. Our findings underscore the importance of transparent reporting through KAMs disclosure and the role of knowledgeable and educated individuals in audit committees in facilitating a more efficient and timely audit process. Also, our finding indicates that the beneficial effect of KAMs may be more noticeable to larger firms.
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    Audit report lag and the cost of equity capital
    (Emerald Publishing Limited, 2024-10-21) Bhuiyan MBU; Man Y; Lont DH
    Purpose This research investigates the effect of audit report lag on the cost of equity capital. We argue that an extended audit report lag reduces the value of information and raises concerns for investors, resulting in an increased cost of equity capital. Design/methodology/approach We hypothesize that audit report lag increases the firm cost of equity capital. We conduct ordinary least squares (OLS) regression analyses to examine our hypothesis. Finally, we also perform a range of sensitivity tests to examine the hypothesis and robustness of findings. Findings Using a sample of the listed US firms from 2003 to 2018, we find that firms with higher audit report lag have a higher cost of equity capital. Our findings are economically significant as one standard deviation increase in audit report lag raises 3.82 basis points of cost of equity capital. Furthermore, our results remain robust to endogeneity concerns and alternative proxies for the cost of equity capital measures. Finally, we confirm that audit report lag increases the firm cost of equity capital through increasing information asymmetry and future financial restatement as a mediating channel. Originality/value We contribute to the theoretical discussion about the role of audit report lag and investors' perceptions. Overall, our results suggest that audit report lag affects a firm cost of equity capital.
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    Climate change and geopolitical conflicts: The role of ESG readiness
    (Elsevier Ltd, 2024-02-27) Alam A; Banna H; Alam AW; Bhuiyan MBU; Mokhtar NB; Evans JM
    This study examines the relationship between climate change vulnerability and geopolitical risk using data on 42 countries from 1995 to 2021. Utilising two distinct indices, the climate vulnerability index (CVI) and the country-specific geopolitical risk (CGPR) indices, we find that countries with high vulnerability to climate change are more likely to experience geopolitical conflicts. Further analysis reveals that country-level overall economic, social, and governance (ESG) readiness significantly mitigates this detrimental effect. This moderation is mainly attributed to the social and governance readiness measures. Additional tests indicate that the mitigating role of ESG is more pronounced for countries with high institutional governance. These results remain resilient through a set of endogeneity tests using matched samples of countries generated through propensity score matching (PSM) estimation. Our findings suggest that addressing climate vulnerability is crucial to promoting global peace and geopolitical stability.
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    Corporate culture and carbon emission performance
    (Elsevier Ltd, 2024-11) Hasan MM; Bhuiyan MBU; Taylor G
    Using a large sample of U.S. firms from 2002 to 2020, we investigate the relationship between corporate culture and the extent of carbon emissions. We provide evidence that the quantum of carbon emissions is negatively associated with corporate cultural attributes manifested by integrity, teamwork, innovation, and respect. These results hold after controlling for potential endogeneity issues using several identification techniques. We also document that the negative culture–emissions relationship is magnified in firms with weak corporate governance and in those operating in environmentally sensitive industries. Additionally, this relationship is less salient in the presence of social capital. Finally, we demonstrate that in firms with a stronger culture, elevated carbon emissions result in a lower firm value. Our findings may be of interest to environmental regulators and management in their pursuit of firm-level carbon emission targets.
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    Does female director expertise on audit committees matter for carbon disclosures? Evidence from the United Kingdom
    (Elsevier Inc, 2024-06) Abbasi K; Alam A; Bhuiyan MBU; Islam MT
    We investigate whether accounting and non-accounting female financial experts on audit committees influence carbon disclosures. Based on a sample of listed firms from the United Kingdom for 2009–2015, our findings show that non-accounting female experts on audit committees increase carbon disclosures. Our results support the view that non-accounting female experts possess greater business knowledge and are skilled in foreseeing the impact of management’s decisions, thus, enhancing carbon disclosures. Furthermore, our results are robust to alternative estimation techniques and endogenous concerns. We also find that firms in less carbon-intensive industries benefit from higher carbon disclosure in the presence of female non-accounting experts on audit committees. This study contributes to the recent research on corporate governance and carbon disclosures. Further, it extends recent studies identifying the specific characteristics of female directors that enhance environmental disclosures. Moreover, we respond to the calls for research on the personal attributes of directors and carbon disclosures by examining whether the accounting and non-accounting expertise of female directors on audit committees affects carbon disclosures.
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    Financial constraints and asymmetric cost behavior
    (Springer-Verlag GmbH, 2021-03-01) Costa MD; Habib A; Bhuiyan MBU
    This study investigates the association between financial constraints and cost asymmetry. Using a large U.S. sample of firms from 1976 to 2016, we find that financially constrained firms exhibit less cost asymmetry. However, such low cost asymmetry is more pronounced for SG&A cost category compared to operating cost category. Our results remain generally consistent across various specifications of financial constraints measures and various asymmetric cost behavior measures. We explore three contextual settings that might affect the association differentially, namely, the future value-creating potential of SG&A expense setting, the investment opportunities setting, and the earnings management setting. In addition, we find evidence that financial constraint leads to lower cost asymmetry, even when managers have received optimistic signals about future sales. As resources drive the costs of a business, and financial constraints affect resource availability, studying the cost behavior of constrained firms makes a valuable contribution to the existing cost asymmetry literature.
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    Overlapping committee membership and cost of equity capital
    (Elsevier B V, 2024-04) Bhuiyan MBU; Cheema MA
    This study examines the association between overlapping committee membership and the cost of equity capital among listed companies in Australia. Overlapping committee membership occurs when a director serves on multiple supervisory committees concurrently. To the extent overlapping committee membership reduces information asymmetry, improves financial reporting quality, and consequently reduces the overall risk of the firms, we expect a negative relationship between overlapping membership and the cost of equity capital. Consistent with our argument, we find a positive impact of overlapping committee membership and provide evidence that firms with overlapping committee membership have a lower cost of equity capital. Furthermore, our results indicate that the positive impact of overlapping committee membership on the cost of equity capital is more evident when overlapping committee members are non-busy directors.
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    Problem Directors and Corporate Risk-Taking
    (John Wiley and Sons Ltd on behalf of British Academy of Management, 2023-10-20) Bhuiyan MBU; Liu J; Alam A; Johan S
    This study investigates the impact of a ‘problem director’ on the risk-taking propensity of a firm and its consequences for firm value. Analysing a sample of US companies, we find that corporate risk-taking propensity increases when a firm appoints a problem director. Our results are of economic significance, indicating that a one standard deviation increase in problem director's score leads to a 2.33% to 4.17% increase in corporate risk-taking. Mediation analysis reveals that a problem director increases firm risk-taking through reducing financial reporting quality. Further, a firm's risk-taking increases when a new problem director joins the board, and the damaging effect persists even after the problem director has left. Moreover, if a chief executive officer (CEO) is a problem director, s/he displays a greater predisposition for risk-taking. Moreover, when a problem director also sits on a board led by a problem CEO, we determine that the former will have an even greater propensity to take risks. Further analysis determines that the presence of problem directors damages long-term firm value in the aftermath of risk-taking behaviour. Overall, this study provides fresh evidence revealing a web of connections between a problem director, ineffective corporate governance and a decline in firm value.
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    Sales Order Backlog and Credit Ratings
    (Taylor and Francis Group on behalf of the European Accounting Association, 2024-05-05) Habib A; Ranasinghe D; Bhuiyan MBU
    This study examines the association between sales order backlog and credit ratings. We posit that credit rating agencies consider order backlog as a positive signal about strong future demand and incorporate that into their rating decisions and provide higher ratings to firms with substantial order backlogs. However, being a non-GAAP, unaudited metric, order backlog could also reduce financial reporting quality and hence, credit ratings of firms. Using a sample of US firms from 1980 to 2017, we find a positive and significant association between order backlog and credit ratings, suggesting that order backlog serves as a valuable measure in credit rating assessment by providing positive signals about future earnings to rating agencies.