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Purpose The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return). Design/methodology/approach Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study. Findings Environmental performance and assurance information had a greater influence on the investment judgments of investors with strong environmental responsibility views. In contrast, participants’ environmental performance return views did not moderate the influence of environmental performance and assurance information on their judgments. Supplemental analysis indicates that these contrasting results are due to the fact that the two investor views have differing influences on the relative importance that investors place on financial vs environmental performance information. Research limitations/implications This study presented participants with summarized financial and environmental performance information to maintain scale compatibility between financial and environmental measures. However, the information was presented in a format similar to those used by online brokerages. Practical implications This study suggests that financial statement preparers should consider investors’ views regarding the importance and value of environmental performance information when making decisions to disclose and obtain assurance on this information. Social implications Standard setters should consider individual differences among investors when developing guidance regarding the disclosure and assurance of environmental performance information. Originality/value There is limited prior research which examines how investors’ views of the importance of environmental performance information may influence investment judgments. This research indicates that the strength of investors’ environmental responsibility importance moderates the previously reported influence of environmental performance and assurance information on investment judgments.

Olibe (2016) uses price and trading volume responses around IFRS earnings disclosures for U.K. cross-listed firms trading as American Depository Receipts in U.S. equity markets to investigate whether such disclosures provide information to market participants over and above U.S. GAAP earnings disclosures. He finds evidence of significant price and trading volume responses for IFRS earnings disclosures, leading to the conclusion that market participants find that those disclosures facilitate trading in U.S. equity markets. This discussion focuses on the paper's incremental contribution to the literature and offers suggestions for improvements in the research design and analyses.

Cisco Systems, Inc. manufactures and sells networking and communications products and provides services associated with that equipment and its use. In April 2001, Cisco announced a charge of $2.249 billion against earnings for obsolete inventory. The financial press gave extensive coverage to the write-off, including claims that Cisco was writing off inventory in an effort to set up future windfall profits. Students are required to examine and integrate information from multiple sources, including the relevant U.S. authoritative literature, SEC commentary relevant to Cisco's decision, and Cisco's disclosures, to critically evaluate reactions from the financial press and examine the potential for biased reporting in both Cisco's disclosures and the reactions of the financial press. This case is appropriate for an undergraduate intermediate accounting course or for graduate courses in financial statement analysis or accounting theory.

Recently, pressure from multiple stakeholders regarding corporate social responsibility (CSR) policies and activities has resulted in firms' increased effort to measure and report information on numerous environmental and social issues. Disclosure of CSR information has generally been voluntary, and guidelines regarding the measurement and reporting of such information have been developed by stakeholder groups, evolving as a function of social norms. In spite of the apparent plurality of viewpoints contributing to the process, research results indicate that the outcomes seldom reflect the full range of stakeholder concerns, and often reflect only the preferences of dominant corporate interests (see, for example, Archel et al., 2011). Shortcomings in existing reporting and the perceived importance of this information for stakeholder decision making are factors in the call for greater regulation of CSR reporting to facilitate both the existence and comparability of CSR disclosure. While accountability to so...

SUMMARY This study investigated whether auditors who used a diagram designed around systems-thinking principles to acquire information for analytical procedures would focus more on patterns of changes in accounts and assess misstatement risk differently than auditors who used an informationally equivalent diagram organized by business-process categories. During a laboratory experiment, experienced auditors performed analytical procedures using one of two alternative diagrams. Participants documented their concerns about misstatement risk and rated the diagnostic relevance of information about patterns of changes in accounts. Auditors who used the systems-thinking tool focused more on diagnostic patterns of fluctuations in accounts and came to different conclusions about risk. Data Availability: Data will be made available by the authors upon request.

Corporate social responsibility (CSR) reporting is emerging in response to demand from a broad range of stakeholders. Comparability and reliability of information would be enhanced if CSR reporting becomes mandatory. If CSR reporting is mandated, which we believe is desirable, the content and form of the disclosure needs to be determined. We examine the underlying conceptual frameworks for both CSR and financial reporting to determine whether it is feasible or desirable for CSR reporting to be integrated with financial reporting. We discuss whether a regulatory body or a participative entity should be responsible for developing an appropriate framework. We also discuss the potential for assurance if CSR reporting were to be integrated with financial reporting as well as specific problems that would be associated with the audit of integrated reports.

This study extends prior research by investigating and finding that nonprofessional investors’ attitudes regarding environmental sustainability affect their views on the relative importance of environmental versus financial performance and whether environmental performance affects firm investment returns. It also investigates how these views moderate the influence of environmental performance and assurance information on investor judgments. Environmental performance has a positive effect on the investment desirability and amount judgments of nonprofessional investors who find environmental performance relatively more important, and assurance has a positive effect on the investment desirability judgments of this same group of investors. However, neither environmental performance nor assurance affects the investment judgments of nonprofessional investors who believe that environmentally responsible companies yield higher returns. The results suggest that investors’ environmental attitudes are important in influencing the effects of environmental performance information on investment judgments.

This paper reports the results of a study designed to investigate the existence of an unintended causal relation between firm corporate social responsibility (CSR) performance and investors' assess...

This paper provides a theoretical analysis of the impact of social norms and enforcement regime on the dynamics of taxpayer compliance. An aggregate-level model, inspired by epidemic models in mathematical biology, is developed to evaluate the flows between classes of compliant and noncompliant taxpayers. Convergence in theoretical results is sought and found via a second model that emphasizes micro-level agent behavior. Several interesting observations arise from our analysis. In particular, the impact of changing enforcement levels on compliance depends upon whether the initial population is relatively compliant or non-compliant. Compliant populations are insensitive to changes in enforcement policies until the policies become sufficiently lax. Then a sudden shift to high levels of noncompliance is observed. In contrast, relatively noncompliant populations respond to increased enforcement severity by gradually increasing compliance. Then, when enforcement becomes sufficiently harsh, a sudden shift in aggregate behavior is observed, to very high levels of compliance. Once the discontinuous shift in behavior (from compliance to noncompliance or vice versa) occurs, our models predict that a return to the enforcement policy existing immediately before the change in behavior will be insufficient to cause the population to return to its previous state. Finally, over a range of compliance levels, two equilibria are observed that are dependent on the initial compliance behavior of the population. This is consistent with the observation that compliance varies considerably across time and geographically under similar enforcement regimes.