Accounting report
Javad Shekarkhah
Abstract
The growing significance of sustainability reporting, as one of the most recent and pivotal trends in the transformation of corporate reporting, has led to a substantial increase in research in this field. Accordingly, this study conducts a systematic review of research examining the effect of sustainability ...
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The growing significance of sustainability reporting, as one of the most recent and pivotal trends in the transformation of corporate reporting, has led to a substantial increase in research in this field. Accordingly, this study conducts a systematic review of research examining the effect of sustainability reporting on financial performance. The final sample comprises 95 articles indexed in the Scopus and Web of Science databases, covering the period from 2013 to the end of June 2025. The PRISMA checklist was employed to develop the review protocol. The findings indicate that 70% of the studies report a positive impact of sustainability reporting on ROA, 64% demonstrate a positive effect on ROE, and 72% show a positive influence on market-based performance metrics (such as Tobin's Q and the market-to-book value ratio). These results suggest a relative consensus regarding the positive impact of sustainability reporting on corporate performance. Additionally, the findings reveal that contextual factors and moderating variables, such as the level of economic development, corporate governance, ESG investors, GRI standards, and levels of transparency, can influence this relationship. Furthermore, the study highlights that different components of ESG disclosures may have varying impacts on corporate performance, although research outcomes in this regard are highly heterogeneous. Collectively, the reviewed studies suggest that sustainability reporting is not merely a regulatory requirement but a strategic asset for enhancing financial performance, underscoring the need for companies to develop long-term strategies for implementing sustainability reporting.
Introduction
In recent decades, corporate performance has been defined as a measure of a firm's effectiveness in utilizing limited resources to create value. In the context of value creation, companies strive to achieve sufficient returns while meeting the expectations of relevant stakeholders (Brundtland, 1987). In the current era, investors increasingly consider not only financial reports but also non-financial disclosures to better inform their investment decisions. Sustainability reporting, which enhances transparency, enables investors to make more informed and well-founded investment choices (Leins, 2020). Environmental, social, and governance (ESG) issues and sustainability are closely intertwined concepts that have garnered significant attention in recent years due to the need to address global challenges and promote responsible business practices. Sustainability reporting is defined as a set of activities undertaken by organizations to provide evidence of the integration of social and environmental considerations into corporate operations and interactions with stakeholders. The concept of sustainability reporting emerged in the early 1980s with the advent of environmental reporting (Aifuwa, 2020).
The academic literature suggests that engaging in corporate social responsibility (CSR) activities not only enhances relationships with stakeholders and the broader community but also differentiates companies in competitive markets, fostering trust and maximizing value (Ameer & Othman, 2012; Van Linh et al., 2022). In recent years, sustainability reporting has garnered significant attention as companies, investors, and consumers increasingly prioritize sustainability. Sustainability is defined as meeting present needs without compromising the ability of future generations to meet their own needs. As companies strive to maintain their market position amid rapidly evolving business environments, it has become evident that a sole focus on financial performance is no longer sufficient. Sustainability performance and disclosure have become increasingly critical for achieving competitive success (Hahn & Kühnen, 2013).
A substantial body of research has explored the relationship between sustainability and corporate performance, yielding varied results ranging from positive to insignificant or negative outcomes (Rodgers et al., 2019). The literature on the relationship between sustainability reporting and corporate financial performance has produced conflicting findings, with prior studies indicating that results are so diverse that definitive conclusions remain elusive (Nguyen et al., 2025). Given these considerations, the challenges associated with sustainability and corporate performance have attracted growing attention from researchers and practitioners, leading to a significant increase in related publications. Several studies have sought to synthesize this extensive literature, employing bibliometric analysis and systematic reviews to gain a comprehensive understanding of the field, identify knowledge gaps, explore new ideas, and position their contributions within the existing body of research. While bibliometric analyses and systematic reviews on sustainability and its reporting have proliferated, few studies have specifically focused on the relationship between sustainability reporting and corporate performance.
A review of the literature reveals that systematic reviews of the relationship between sustainability reporting and performance have received limited attention. Recent studies have primarily focused on bibliometric analyses to identify trends and key patterns in this field, without providing a comprehensive synthesis or analysis of the key findings of relevant research. Given the increasing importance of sustainability reporting as one of the latest transformative trends in corporate reporting, this study undertakes a systematic review of research examining the impact of sustainability reporting on financial performance.
Methodology
This research is classified as applied and exploratory in terms of its objectives and aligns with the interpretive paradigm and a qualitative research methodology. Consistent with the research objectives, a systematic review method was employed for data collection, and an inductive content analysis approach was used to analyze the selected studies. The latest version of the PRISMA checklist (2020) was utilized to develop the review protocol. The search for articles was conducted in two reputable academic databases, Scopus and Web of Science. The research period was set from 2013 to the end of June 2025. To enhance the sensitivity and comprehensiveness of the search, equivalent and related keywords for the two main terms, "sustainability reporting" and "corporate financial performance," were used in combination with the Boolean operator "OR." The search was limited to English-language, peer-reviewed journal articles. The retrieved articles were imported into the Zotero software based on the search protocol and subjected to multiple screening stages. Initially, duplicate articles from both databases were removed. Subsequently, articles relevant to the research topic and objectives were selected based on their titles. In the next stage, articles were screened based on their abstracts. Finally, after a full-text review, 95 studies were retained for analysis.
Results
The systematic review of the studies indicates that a substantial majority of the examined research supports a positive relationship between sustainability reporting and both accounting-based performance measures (return on assets and return on equity) and market-based performance measures (Tobin's Q and market-to-book value ratio). Specifically, 70% of the studies report a positive impact of sustainability reporting on return on assets, 64% indicate a positive effect on return on equity, and 72% demonstrate a positive influence on market-based performance indicators. These positive findings are consistent with established theoretical frameworks, including signaling theory, legitimacy theory, and stakeholder theory. According to signaling theory, market signals that reduce information asymmetry assist investors in making more informed decisions. Sustainability reporting enables firms to transmit positive signals to the market, thereby reducing information asymmetry and potentially enhancing firm value. Furthermore, legitimacy theory posits that firms operate with the implicit approval of society and must continuously demonstrate their legitimacy to avoid the loss of social support. In this context, companies may disclose additional information to maintain legitimacy, which can ultimately lead to higher firm value. Consequently, firms that engage in sustainability reporting can reinforce their legitimacy and enhance value creation. Similarly, stakeholder theory suggests that a firm’s survival depends on its ability to meet the expectations of its stakeholders. This perspective emphasizes that firms must engage in corporate social responsibility activities, beyond the sole objective of maximizing shareholder wealth, to address the interests of non-financial stakeholders who can provide critical resources and support. Overall, these findings provide empirical support for signaling, legitimacy, and stakeholder theories and underscore the importance of policymakers encouraging or mandating sustainability reporting disclosures to enhance market transparency and efficiency.
Conclusion
Based on the consistent evidence of a positive relationship between sustainability reporting on financial performance, the reviewed studies provide important implications for both policymakers and corporate managers. Several studies suggest that sustainability reporting can function as an effective risk mitigation mechanism, particularly in uncertain and volatile business environments. Accordingly, sustainability reporting is framed not merely as a regulatory obligation but as a strategic resource capable of enhancing financial performance. Firms are therefore encouraged to develop long-term strategies for the implementation of sustainability reporting. From a policy perspective, governments are urged to strengthen and refine existing regulatory frameworks to establish a robust foundation for sustainability reporting practices. Collectively, these studies strongly support the view that corporate sustainability disclosure constitutes a strategic tool for increasing firm value and sustaining competitive advantage. Another key implication emerging from the literature concerns the role of regulation in improving transparency and corporate performance. Empirical evidence indicates that adherence to the Global Reporting Initiative (GRI) standards in sustainability disclosures is associated with higher firm value, highlighting the importance of standardization and transparency in building investor confidence. Furthermore, several studies advocate the integration of multiple reporting frameworks as a means of enhancing disclosure quality and value creation. Finally, a number of studies emphasize the differentiated effects of environmental, social, and governance (ESG) dimensions, arguing that ESG considerations should be systematically incorporated into corporate financial planning, regulatory design, and investment decision-making to achieve long-term outcomes.
Capital Structure
Behrooz Badpa; Darioush Akhtarshenas; Amin Ghanbari
Abstract
In this study, the efficiency of the company's value chain was measured using the stochastic frontier function, and then the effect of intellectual capital on value chain efficiency, cash flows, and bankruptcy risk was examined. Although the statistical population of the study included all companies ...
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In this study, the efficiency of the company's value chain was measured using the stochastic frontier function, and then the effect of intellectual capital on value chain efficiency, cash flows, and bankruptcy risk was examined. Although the statistical population of the study included all companies listed on the Tehran Stock Exchange, 142 companies were selected as the statistical sample, and their data were analyzed over an 11-year period (2013-2023). The research hypotheses were tested using structural equation modeling with the SmartPLS software. The findings indicated that, at the 95% confidence level, the company's intellectual capital has a positive effect on value chain efficiency and cash flows, but a negative effect on bankruptcy risk. On the other hand, value chain efficiency increases cash flows while reducing bankruptcy risk.
Introduction
In today's complex and modern economic environment, companies can gain a competitive advantage by optimally utilizing not only tangible assets but also the knowledge, experience, and capabilities of their employees. Firms with higher intellectual capital can adopt favorable strategies to achieve success by leveraging all available resources, thereby enhancing performance and attaining sustainable operational performance. The value-added intellectual coefficient model, which measures the efficiency of intellectual capital, comprises three components: human capital efficiency, structural capital efficiency, and capital employed efficiency. By investing in human capital development, a company can improve the efficiency of its value chain through increased workforce productivity and effectiveness. Similarly, investing in structural capital can enhance value chain efficiency by streamlining processes, reducing waste, and improving communication and collaboration. Moreover, investment in intellectual capital development typically leads to increased returns and value creation, thereby improving the overall quality of the value chain. Based on this, the efficiency of the company's value chain was assessed using stochastic frontier analysis. Subsequently, the impact of intellectual capital on value chain efficiency, cash flows, and bankruptcy risk was examined.
Methodology
Although the research population included all companies listed on the Tehran Stock Exchange, a sample of 142 companies was selected due to limitations in obtaining reliable results. Data from these companies were analyzed over an 11-year period (2013–2023). The research hypotheses were tested using structural equation modeling (SEM) with the SmartPLS software. SEM enables researchers to explore complex relationships among multiple variables simultaneously (Hair et al., 2017). According to the existing literature, companies with higher intellectual capital are expected to perform better across the value chain by leveraging both tangible and intangible assets, resulting in improved cash flows and reduced bankruptcy risk. Additionally, effective value creation throughout the value chain is expected to lower bankruptcy risk and enhance cash flows. Based on this framework, the research proposed the following hypotheses:
Hypothesis 1: The company's intellectual capital has a significant positive effect on the efficiency of its value chain.
Hypothesis 2: The company's intellectual capital has a significant negative effect on its bankruptcy risk.
Hypothesis 3: The company's intellectual capital has a significant positive effect on its cash flows.
Hypothesis 4: The company's value chain efficiency has a significant negative effect on its bankruptcy risk.
Hypothesis 5: The company's value chain efficiency has a significant positive effect on its cash flows.
Results
The research findings, at a 95% confidence level, revealed that intellectual capital positively influences value chain efficiency and cash flows, while negatively affecting bankruptcy risk. Furthermore, value chain efficiency enhances cash flows and reduces the likelihood of bankruptcy. The highest path coefficient is associated with the impact of intellectual capital on the company's cash flows. The impact of intellectual capital on cash flows is greater than the impact of intellectual capital on value chain efficiency, and the impact of value chain efficiency on cash flows. In explaining the possible reasons, it can be stated that intellectual capital can affect the value chain by improving the efficiency and effectiveness of activities. Specifically, it can lead to more efficient production of goods or services, reduce costs, and improve the overall performance of the value chain; however, the relationship between intellectual capital and value chain efficiency may be influenced by the industry and context in which the company operates. In addition, intellectual capital allows companies to create greater value for customers, resulting in increased sales and revenue and, consequently, stronger cash flows. By improving transparency and reducing information asymmetry, intellectual capital disclosure enhances investor confidence and lowers the cost of equity, which ultimately boosts net cash flows. In explaining the relatively lower magnitude of the path coefficient between intellectual capital and bankruptcy risk compared to that between intellectual capital and cash flows (regardless of the direction of the relationship), it can be argued that well-developed intellectual capital enhances value chain efficiency and shareholder value, thereby increasing sales and operating income. Nevertheless, innovation derived from intellectual capital does not always guarantee a competitive advantage, as it may be influenced by factors such as industry type, economic sanctions, macroeconomic conditions, and market competition.
Discussion & Conclusion
The results further confirmed that intellectual capital significantly improves value chain efficiency. In other words, companies that effectively utilize all dimensions of intellectual capital—structural, human, physical, and financial—exhibit better overall performance across the value chain. These companies also experience higher and more stable cash flows. These findings align with the results of previous studies by Ghayouri-Moghaddam et al. (2012), D'Amato (2021), and Akpinar (2017). Moreover, companies with higher intellectual capital were found to have a lower bankruptcy risk, supporting the conclusions of Festa et al. (2021), Rasheed (2023), and Mollabashi and Sendani (2014), while differing from those of Bakshani (2014). In addition to the above results, the research findings showed that the efficiency of the company's value chain has a significant positive effect on cash flows and a negative effect on bankruptcy risk, which is consistent with the findings of Sun and Cui (2012) and Akpinar (2017). The results of the study expand the literature on the role of corporate capital dimensions, especially non-physical capital, in the synergy of the company's value chain components and its competitive advantage. On the other hand, the results of the study can be useful for decision-making and planning by company managers, analysts, and consultants in the stock market, as well as investors, shareholders, and government policymakers. In this regard, an index called the value chain efficiency rating, which covers the company's overall performance during various operational and support stages, should be considered by analysts and investors in fundamental stock analysis to enable more accurate estimation of stock intrinsic value. Given the positive and significant impact of intellectual capital on cash flows, it is recommended that managers and consultants consider the company's intangible assets and intellectual capital as factors affecting investment decisions in capital budgeting. It is also recommended that legislators specify the permitted and recommended methods for evaluating companies' intellectual capital so that a more accurate and standardized basis for their evaluation is available. In addition, because some listed companies have foreign exchange income, and given the severe exchange rate volatility in Iran and the high inflation rate, analysts and capital market participants should separate the company's actual financial performance from inflationary financial figures so that the company's intellectual capital can be evaluated more accurately.
Accounting and various aspects of finance
Mohsen Khotanlou; Mahdi Kazemioloum; Yasaman Moradi Behjat
Abstract
In recent years, non-financial disclosure has become increasingly important for stakeholders in making informed decisions. Non-financial disclosures by companies, such as Environmental, Social, and Governance (ESG) information disclosure, can be influenced by the characteristics of directors and other ...
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In recent years, non-financial disclosure has become increasingly important for stakeholders in making informed decisions. Non-financial disclosures by companies, such as Environmental, Social, and Governance (ESG) information disclosure, can be influenced by the characteristics of directors and other corporate governance mechanisms. Accordingly, the purpose of this research is to investigate the impact of board gender diversity on ESG disclosure, with a focus on the moderating role of audit committee characteristics. In this study, data from 78 companies listed on the Tehran Stock Exchange from 2013 to 2024 (858 firm-years) were collected, and the research hypotheses were tested using pooled data and multiple regression analysis. The research findings indicate that gender diversity on the board of directors has a positive and significant impact on ESG disclosure. In other words, an increase in the presence of women on the board is associated with a corresponding increase in the ESG disclosure index. The research findings also indicated that the independence and financial expertise of the audit committee moderate the relationship between board gender diversity and ESG disclosure; however, the size of the audit committee members does not have a moderating effect on this relationship. This study offers valuable insights for managers and investors to evaluate the impact of gender diversity on the boards of directors and audit committees in ESG disclosure, and to inform their decision-making. Furthermore, legislators and policymakers can revise corporate governance mechanisms to promote greater inclusion of women not only on company boards but also in sub-committees to protect the rights of stakeholders better. The findings of the present study indicate a low number of female board members in companies listed on the Tehran Stock Exchange (9.2% of observations), which may affect the research results.
Introduction
In 2015, the United Nations introduced the Sustainable Development Goals to address poverty, environmental degradation, inequality, and justice, with the 2030 Agenda promoting sustainability for all stakeholders and guiding companies to shift from profit maximization to sustainable growth. Non-financial disclosures related to environmental, social, and governance (ESG) factors have gained strategic importance for stakeholders, including governments, investors, and employees, in decision-making processes. These disclosures address environmental concerns (e.g., green technologies), social issues (e.g., human rights), and governance matters (e.g., board independence). Agency and stakeholder theories emphasize the need for long-term, sustainable perspectives, though some view corporate social responsibility activities as a source of agency problems. In contrast, others see them as a competitive advantage. The board of directors, particularly in terms of its gender diversity, plays a critical role in enhancing ESG disclosures and stakeholder accountability, despite conflicting research findings. The audit committee strengthens transparency and accuracy in ESG reporting. This study examines how board gender diversity, moderated by audit committee characteristics, influences ESG disclosures, thereby contributing to the literature, particularly in the unique political context of Iran.
Research Question: What is the impact of board gender diversity on environmental, social, and governance (ESG) disclosures, with the moderating role of audit committee characteristics?
Literature Review
Environmental, Social, and Governance (ESG) issues have gained significant importance for companies due to current competitive requirements and stakeholder attention. By disclosing ESG information, companies aim to reduce agency problems and positively impact capital markets. Since ESG disclosure is often voluntary, studying the factors influencing the improvement of its quality is crucial. Research indicates that corporate governance factors, such as the board of directors and audit committees (especially in the context of agency theory), can play a significant role in reducing information asymmetry and conflicts of interest in ESG information disclosure.
Based on the theoretical foundation and prior research, the following hypotheses are formulated:
Hypothesis 1: Gender diversity on the board of directors has a positive and significant impact on ESG disclosure.
Hypothesis 2: The size of the audit committee moderates the relationship between gender diversity on the board of directors and ESG disclosure.
Hypothesis 3: The independence of audit committee members moderates the relationship between gender diversity on the board of directors and ESG disclosure.
Hypothesis 4: The financial expertise of audit committee members moderates the relationship between gender diversity on the board of directors and ESG disclosure.
Methodology
This applied study utilizes data from audited financial statements, explanatory notes, audit committee reports, and board activity reports submitted to the general assembly of shareholders of firms listed on the Tehran Stock Exchange, utilizing the CODAL system. The data were analyzed with EViews software, and multiple regression analysis was applied to test the research hypotheses. The study encompasses all firms listed on the Tehran Stock Exchange over the period from 2013 to 2023.
Results
The research findings indicate that gender diversity on the board of directors has a positive and significant impact on ESG disclosure. In other words, an increase in the presence of women on the board is associated with a corresponding increase in the ESG disclosure index. The research findings also indicated that the independence and financial expertise of the audit committee moderate the relationship between board gender diversity and ESG disclosure; however, the size of the audit committee members does not have a moderating effect on this relationship..
Conclusion
This study offers valuable insights for managers and investors to evaluate the impact of gender diversity on the boards of directors and audit committees in ESG disclosure, and to inform their decision-making. Furthermore, legislators and policymakers can revise corporate governance mechanisms to promote the greater inclusion of women not only on company boards but also in subcommittees, thereby better protecting the rights of stakeholders. The findings of the present study indicate a low number of female board members in companies listed on the Tehran Stock Exchange (9.2% of observations), which may affect the research results
Financial audit
zahra joudaki chegeni; mohammad hossein safarzadeh; Hamideh AsnaAshari; Fakhroddin MohammadRezaei
Abstract
Considering the scientific and practical significance of research in this field, conducting a bibliometric analysis aimed at mapping the global status, trends, factors, and bibliographic relationships within this domain is necessary and has not yet been comprehensively addressed. In this study, articles ...
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Considering the scientific and practical significance of research in this field, conducting a bibliometric analysis aimed at mapping the global status, trends, factors, and bibliographic relationships within this domain is necessary and has not yet been comprehensively addressed. In this study, articles published in the research domain were collected from the Scopus database for the period spanning 1986 to 2024. Subsequently, to enable a more focused analysis, 38 articles closely aligned with this area were selected. The VOSviewer software was employed for the bibliometric analysis. Based on the bibliometric analysis, the keyword "merger" emerged as a core term, surrounded by other closely related major nodes such as "audit firm merger," "audit quality," "audit fees," "audit efficiency," and "competition," all directly linked to the main research theme. The United States, the Auditing: A Journal of Practice & Theory, and the fields of business, management, and accounting were identified as the most influential in this research area. Additionally, among researchers, Moroney demonstrated the highest level of collaboration with Simnett and Thavapalan. This study elucidates the intellectual and conceptual structure of audit firm mergers, highlighting emerging topics such as auditor-client alignment, audit regulation, market share, auditor switching, and audit efficiency. The findings of this research provide a relatively comprehensive overview of the literature on audit firm mergers throughout its evolution, while also offering future research directions for scholars.IntroductionRegulators and critics of mergers often express concern that a merged audit firm, due to its enhanced market position, may harm its clients. Following a merger, the number of audit service providers decreases, making it more difficult for audit clients to switch to an alternative and appropriate audit firm at more reasonable audit costs. The merger of audit firms has become one of the key concerns in the auditing profession and has attracted the attention of recent studies. Studies related to the merger of audit firms can be categorized into several phases. These phases include the pre-merger stage (antecedents), the merger stage (agreements), and the post-merger stage (consequences). A review of prior research suggests that the post-merger phase of audit firm mergers has predominantly attracted researchers’ attention. Despite numerous studies on the consequences of audit firm mergers, a research gap remains in the area of antecedents and agreements in these mergers. Therefore, given the scientific and practical importance of research in this field, a bibliometric analysis aimed at mapping the global discourse on audit firm mergers and their bibliographic relationships is essential; however, this topic has not been thoroughly explored. This study, by providing a comprehensive overview of the status of audit firm merger research, identifying existing gaps in the literature, and revealing future research trends, serves as a valuable resource for researchers. Moreover, the present study highlights the evolution and trajectory of research related to the literature on audit firm mergers. Method The present study employs a bibliometric methodology within a literature review approach. This quantitative method of reviewing the literature advances understanding of the intellectual structure and evolution of a specific academic field. It aids in visualizing data and performing thematic analyses to better understand the content of research related to audit firm mergers. Additionally, it provides valuable insights for researchers in this domain. In this paper, the process of identifying, screening, qualifying, and analyzing data was systematically implemented. The researchers initiated the process by selecting the Scopus database to collect information from relevant articles. Scopus was chosen as the bibliometric data source due to its applicability across various academic fields and, in this study, for examining the literature on this topic. Initially, a search was conducted to identify articles related to the specified domain. To execute the search, the terms “audit firm mergers,” “audit firm integrations,” “audit firm acquisitions,” “audit firm consolidations,” and “professional services firm mergers” were used in the titles, abstracts, and keywords of articles indexed in the Scopus database. Next, inclusion criteria were established, and articles were filtered based on the 1986–2024 timeframe. More precisely, based on the literature review, only articles published during this period were selected. Subsequently, English was designated as the language criterion, and the type of publication was restricted to peer-reviewed research articles. As a result, only English-language research articles published in the fields of business, management, and accounting; economics, econometrics, and finance; and social sciences were considered for this study. The screening stage ultimately led to the identification of the targeted articles. To ensure their relevance, the titles and abstracts of the articles were reviewed, and irrelevant articles were excluded. Ultimately, 38 articles were included in the analysis. Based on the research process, the final stage involved data analysis, which was performed using the Vosviewer software. Co-occurrence analysis, defined as the repetition of similar keywords across different articles, was conducted. Co-occurrence analysis and the identification of frequently used keywords highlight key research topics. Furthermore, co-citation analysis and co-authorship analysis were performed using the software. Specifically, if two keywords representing a particular research topic appeared simultaneously in a document, those keywords were considered to have a meaningful semantic relationship. FindingsThe progression of the literature on audit firm mergers indicates that this field was relatively underexplored until 2002. In other words, this topic did not receive significant attention from researchers before that year. Over time, as the importance of the subject matter examined in this research grew, the number of published articles showed an upward trend, reflecting the rising significance of the topic. From 2002 onward, the field has experienced fluctuating growth, suggesting that substantial research will continue to be conducted in this area through 2024 due to its critical importance. Among the countries contributing to the body of research, the United States leads with 20 publications, followed by the United Kingdom with 8, and Hong Kong with 6. Regarding research areas, the majority of articles pertain to business, management, and accounting (57.1%), followed by economics, econometrics, and finance (38.1%), and social sciences (4.8%). Most articles were published in reputable journals such as Auditing: A Journal of Practice and Theory (4 articles), Contemporary Accounting Research, and the Journal of Accounting and Public Policy (3 articles each). The keyword “mergers” emerged as the central theme, with closely associated major nodes such as audit firm mergers, audit quality, audit fees, audit efficiency, auditor-client alignment, the audit market, knowledge transfer, industry specialization, audit reporting delays, and audit market dynamics, all aligning with the primary focus of this study. In total, 89 authors have contributed to research on audit firm mergers, forming a collaborative network of researchers. The distribution of scholars within this field reveals that several authors have worked together on multiple projects. For instance, Moroney, in collaboration with Simnett and Thavapalan, has co-authored several studies and accounts for the highest number of publications in this domain. ConclusionThe present study systematically reviews articles on audit firm mergers published between 1986 and 2024, mapping the knowledge network through keyword co-occurrence analysis and co-authorship analysis. The keyword "mergers" was identified as the central theme, with closely related major nodes including audit firm mergers, audit quality, audit fees, audit efficiency, auditor-client alignment, the audit market, knowledge transfer, industry specialization, audit reporting delays, and audit market dynamics, all aligned with the primary focus of the study. The findings indicate that, while the topic of audit firm mergers was underexplored until 2002, interest in the field has shown an upward trajectory in subsequent years, reflecting its growing significance, with notable research activity expected to continue through 2024. The United States leads the field with 20 publications, followed by the Auditing: A Journal of Practice and Theory with four articles. The domain of business, management, and accounting accounts for 57.1% of publications, and prominent contributors include Moroney, Simnett, and Thavapalan, each with three highly relevant studies. Future research directions in this field should focus on emerging topics such as auditor-client alignment, market share, auditor switching, audit regulations, audit reporting delays, and audit efficiency. Based on the literature review, future investigations should aim to enhance academic awareness of approaches to audit firm mergers and the associated keywords. The results of this study offer a comprehensive overview of the literature on audit firm mergers over time, providing valuable insights for researchers regarding topic selection, potential collaborators, and research centers for potential funding opportunities.
Profitability
Omid Tarast; Farzad Ghayour; Parviz Piri
Abstract
Financial scandals and crises observed in many countries as a result of the manipulation of financial reports have led to a loss of trust among investors and stakeholders in financial information. This lack of trust in financial reporting and the low quality of financial information flows can act as ...
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Financial scandals and crises observed in many countries as a result of the manipulation of financial reports have led to a loss of trust among investors and stakeholders in financial information. This lack of trust in financial reporting and the low quality of financial information flows can act as a deterrent to attracting investment. In the present study, data from 148 companies listed on the Tehran Stock Exchange over a 12-year period (2012-2023) were analyzed. For hypothesis testing, the collected data were classified into 11 distinct groups. To assess cosmetic earnings management related to the rounding of earnings figures across life cycle stages, Benford's Law was applied. The Chi-square test was used to compare the observed (actual) frequencies of earnings figures with the expected frequencies based on Benford’s distribution. The findings indicate that for both high- and low-audit-quality companies, across all three life cycle stages—growth, maturity, and decline—there is no statistically significant difference between the observed and expected frequencies. Therefore, the earnings figures in all examined stages conform to Benford's distribution and show no signs of cosmetic earnings management. Future research is encouraged to conduct similar analyses at the industry level and to incorporate additional audit quality indicators, such as auditor turnover, auditor tenure, and auditor size
Introduction
Investors, who are the economic pulse of the financial industry, seek to be fully and transparently informed about the developments and events occurring in business units. Benford distribution (1938) can be considered one of the tools used to evaluate financial reports.
Benford’s distribution is an analytical process that compares actual results with expected results to identify abnormal transactions. This distribution, also known as the first-digit law, is a type of empirical observation that states that the first digits in many numerical data sets are distributed in a specific, non-uniform manner. In other words, Benford’s distribution indicates that, for each digit position (from the first to the fourth digit), the probabilities of the digits one through nine are unequal, and lower digits occur more frequently than higher digits. Therefore, the probability of smaller digits appearing in the leading position is higher than that of larger digits.
The rounding of financial figures often occurs when the observed distribution of numbers deviates slightly from the expected distribution. Any manipulation of figures, if carried out deliberately, can be considered a self-serving behavior, although such actions may serve the interests of the business unit or certain individuals. In view of the above, the purpose of this study is to investigate the extent to which profit figures of firms listed on the Iranian stock exchange are trimmed to achieve rounding aligned with managers’ personal interests. In line with the objectives of the research, the following questions are raised: Does high or low audit quality affect the extent to which profit figures are trimmed? Across the different life cycle stages under study, does profit trimming occur when audit quality is present or absent?
Literature Review
The Benford distribution was first introduced by Simon Newcomb (1881), an American mathematician who discovered a pattern in logarithmic tables. At that time, academics did not pay attention to Newcomb's research, and it was not until Frank Benford (1938), a physicist at General Electric, that this phenomenon was revisited and formally examined. Benford examined a set of natural data (20,229 randomly selected observations) such as baseball statistics, death rates, stock market prices, atomic weights in chemical compounds, Fibonacci numbers, river lengths and lake areas, urban population and census data, books and magazines, and similar datasets. Finally, he confirmed the distribution observed by Simon Newcomb, showing that in numerical data, there is a tendency toward smaller leading digits, and the repetition of the digits one and two is more frequent than that of the digits eight and nine. Following increased academic interest, this distribution was officially named and became known as the Benford distribution. However, research in this area did not progress as expected until Roger Pinkham (1961), a professor of mathematics, provided a mathematical proof of this phenomenon. Subsequently, the American mathematician Hill (1995) theoretically demonstrated, using a form of the influential central limit theorem in statistics, that the first digit follows this principle (Benford distribution). Based on his studies, Hill found that if the distribution of digits occurs randomly and random samples are extracted from that distribution, the resulting distribution will converge toward the logarithmic distribution (Benford's law), which can also assist in the interpretation and prediction of digital patterns.
Motivations related to profit embellishment in Iranian business units may differ from those in Western countries (Pourheidari and Hemmati, 2004). In studies conducted by He and Gan (2014) on the financial reports of Japanese business units, they found that applying Benford's law to profit and income accounts revealed that profit embellishment differs across industries, and that profit embellishment is more pronounced than income embellishment. In a study by Lennox et al. (2018), the authors examined profit embellishment, auditor adjustments, and the financing of business units, focusing on the magnitude of auditors' profit adjustments during financing events. They found that in the pre-financing stage, the magnitude of auditor adjustments that reduce reported profits is significantly large.
Methodology
The present study can be considered an applied study in terms of its purpose. The information was extracted using a purposive sampling method. This study seeks to design a model based on empirical observations, and the data used in the study are quantitative. The present study seeks a general result; therefore, it is both deductive and inductive in terms of the type of reasoning and conclusion. The present study covers all business units listed on the Tehran Stock Exchange during the period from 2012 to 2023, and accordingly, the final sample was selected using the systematic elimination method.
Results
The first main hypothesis states that the life cycle stages (growth, maturity, and decline) have a significant effect on the utilitarian neatness of the profit figures of business units. To test this hypothesis, given that it must be examined across three stages (growth, maturity, and decline), the analysis was conductedseperately for each stage. The first sub-hypothesis states that in the growth stage, there is no neatness in profit figures, and the distribution of companies' profit figures follows the Benford distribution. The results of the first sub-hypothesis indicate that the significance level for the second digit of profit figures is less than 0.05. Therefore, the null hypothesis, which states that there is no significant difference between the actual (observed) frequency and the expected frequency, is rejected. The significance level for the first, third, and fourth digits of profit figures is greater than 0.05, indicating that there is no significant difference between the actual frequency and the expected frequency. In addition, the test statistic for the second digit is higher than those for the first, third, and fourth digits. Therefore, the first sub-hypothesis is accepted.
Discussion
The results obtained from the hypothesis tests indicate that these findings differ from those of studies conducted in other parts of the world. Although the results of the current study indicate a lack of order in the profit figures of units listed on the Tehran Stock Exchange during the period from 2012 to 2014, it is not possible to state with complete certainty that there is a lack of order in these companies, as this phenomenon may manifest differently across industries and to varying degrees.
Conclusion
The existence of a phenomenon called rounding in the profit figures of business units during their life cycles is not supported by the Chi-square test. The results obtained indicate the absence of profit tidying by management in the profit figures of the sample under study. The results of the research also show that audit quality (high and low) has no effect on the presence or absence of tidying, and that no tidying is observed in the profit figures across different stages of the life cycle.
Accounting and various aspects of finance
Nasibeh Shafakheibari; Alireza Hirad; Mohammadreza Abdoli; Reza Sotudeh
Abstract
This study, through a paradigmatic phenomenological approach, seeks to present a model for understanding the influential role of Ponzi schemes in the formation of opportunistic accounting practices. In the first stage, an attempt was made to identify the propositional themes of the Ponzi phenomenon in ...
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This study, through a paradigmatic phenomenological approach, seeks to present a model for understanding the influential role of Ponzi schemes in the formation of opportunistic accounting practices. In the first stage, an attempt was made to identify the propositional themes of the Ponzi phenomenon in the formation of opportunistic accounting practices through interviews with 20 participants with lived experience, using open-ended questions and codes derived from the Ponzi phenomenon. Subsequently, by creating a researcher-developed checklist rated on the "+8," "0," and "-8" scales, the third stage of data collection sought to classify the propositions into more general conceptual categories, based on focus group scores, in order to develop a paradigmatic model through the categorization of propositional themes. The results of the study, after identifying 371 open codes from the 20 interviews conducted, indicate the identification of 50 propositional themes in the form of a researcher-developed scoring checklist. By assigning focal points to each participant within the specified evaluation panels, the analysis ultimately led to the presentation of a paradigmatic model consisting of 10 categories across five dimensions.
Introduction
The majority of research on the causes and consequences of accounting fraud has been conducted by comparing fraudulent companies to other companies, and the results presented in this regard, although important, have not been able to significantly reduce their effects on investment perceptions in the market. In other words, in the study of fraudulent companies, the relationship between accounting violations and business and legal anomalies, such as long-term appointment of managers, lawsuits, and declining stock prices, is, to a large extent, evident, one possible consequence of which is the emergence of financial distortions through accounting tools that have been repeatedly challenged in prior research. In contrast to these studies, the present study focuses on one of the most emerging opportunistic processes in companies, which can also be implemented through accounting procedures in the contemporary business environment.
Literature Review
The Ponzi scheme, one of the most well-known concepts in the global financial economy, refers to a planned method of fraud and distortion in which income payable to previous investors is generated by attracting capital from new investors. Companies that take advantage of this phenomenon for greater profits secure their returns solely from these intermediary financial flows and, without engaging in any activity that produces real income or profit, often obtain benefits by luring investors. The historical development of this scheme indicates that the use of such methods of distortion and fraud has a long history, dating back to the 1920s and the widespread fraud of Charles Ponzi, who was able to victimize Italian immigrants for his personal gain. Although a review of this historical process shows that analyzing investment experiences and financial crises provides useful insights in this area, today's companies often continue to exploit the potential of this method for profit-seeking purposes, particularly in light of weaknesses in regulatory mechanisms.
Methodology
Research conducted with the aim of paradigm building should be categorized as studies that seek abstractions from the context under study. This is because past research likely did not fully consider the external and internal influences on a cognitive phenomenon, which may be subjectivized. Therefore, presenting a paradigmatic model helps to understand the phenomenon within the context of the study. This section describes the nature of the methodology of the present study based on the principles of paradigmatic phenomenology. Accordingly, during the interview process with experienced actors in the context of the study, the contexts that can influence the phenomenon in line with the five paradigmatic conditions, causal conditions, contextual, intervening, strategies, and consequences, are first identified, so that, through open coding, the subsequent steps can be taken to develop the final paradigmatic model. Therefore, the study employs two primary tools: (1) interviews to explore the context of the phenomenon based on open coding, and (2) checklist scoring scales to evaluate the emerged contexts and classify them into paradigmatic categories. In these explanations, the present study can be described as exploratory in terms of its purpose, which, given the novelty of the Ponzi phenomenon, is justified in identifying the influential contexts emphasized in the first research question. Conducting interviews with participants who have knowledge and experiential expertise, like puzzle pieces, reveals scientific unknowns of the phenomenon under study. In terms of outcomes, from another methodological perspective, the present study can also be considered developmental, as it addresses the lack of reliable cognitive approaches to the Ponzi phenomenon in accounting procedures and contributes to a clearer understanding of financial distortions and frauds. Finally, in terms of data collection, this study is classified as qualitative research with an inductive approach.
Result
This study began by selecting 20 participants with lived experience to identify the propositional themes that, through interviews with open-ended questions and codes derived from the Ponzi phenomenon, indicate the areas of this phenomenon that can influence the formation of opportunistic accounting practices. From the 20 interviews conducted, 371 open codes were identified, which were grouped into 50 propositional themes. These themes were evaluated using a researcher-developed scoring checklist within focus groups, which ultimately informed the final paradigmatic model.
Discussion
Paradigmatic phenomenology is recognized as a sociological approach within both theoretical and applied fields, drawing on areas of humanities knowledge where, due to the novelty of the central phenomenon, there is no coherent understanding within the context of the study. Accordingly, this study employs paradigmatic phenomenology with the aim of exploring the ontology of the Ponzi phenomenon in the formation of opportunistic accounting procedures in commercial companies. This phenomenon, as one of the domains of financial distortion and fraud in commercial companies, influences the emergence of opportunistic accounting as a hidden tool used by many companies in competitive financial markets. Due to its novelty, it lacks sufficient cognitive coherence in existing literature. For this reason, by following the analytical stages of the paradigmatic phenomenological process, the study aims to develop a model as the ultimate goal, in order to explore the influential aspects of the Ponzi phenomenon in the emergence of opportunistic accounting practices.
Conclusion
The results obtained from the final paradigmatic model regarding the ontology of the Ponzi phenomenon in the emergence of opportunistic accounting practices provide a foundation for the conceptual and abstract understanding of this phenomenon within the context of commercial companies. The lack of previous research on the theoretical and applied understanding of the existential philosophy of the Ponzi phenomenon has resulted in the connection between this phenomenon and accounting practices, as its implementation tool at the company level, being largely overlooked. For this reason, exploring the various dimensions of the occurrence of such a problem in accounting practices was among the main objectives of this study. This framework demonstrates how companies involved in implementing the Ponzi phenomenon, or so-called scammers (primary project designers), based on the profit obtained from attracting secondary investors, create an opaque financial cycle to provide the expected returns for primary investors. In doing so, they opportunistically pursue their interests using tools such as accounting, often within a set of inefficient market conditions.
Introduction
The majority of research on the causes and consequences of accounting fraud has been conducted by comparing fraudulent companies to other companies, and the results presented in this regard, although important, have not been able to significantly reduce their effects on investment perceptions in the market. In other words, in the study of fraudulent companies, the relationship between accounting violations and business and legal anomalies, such as long-term appointment of managers, lawsuits, and declining stock prices, is, to a large extent, evident, one possible consequence of which is the emergence of financial distortions through accounting tools that have been repeatedly challenged in prior research. In contrast to these studies, the present study focuses on one of the most emerging opportunistic processes in companies, which can also be implemented through accounting procedures in the contemporary business environment.
Literature Review
The Ponzi scheme, one of the most well-known concepts in the global financial economy, refers to a planned method of fraud and distortion in which income payable to previous investors is generated by attracting capital from new investors. Companies that take advantage of this phenomenon for greater profits secure their returns solely from these intermediary financial flows and, without engaging in any activity that produces real income or profit, often obtain benefits by luring investors. The historical development of this scheme indicates that the use of such methods of distortion and fraud has a long history, dating back to the 1920s and the widespread fraud of Charles Ponzi, who was able to victimize Italian immigrants for his personal gain. Although a review of this historical process shows that analyzing investment experiences and financial crises provides useful insights in this area, today's companies often continue to exploit the potential of this method for profit-seeking purposes, particularly in light of weaknesses in regulatory mechanisms.
Methodology
Research conducted with the aim of paradigm building should be categorized as studies that seek abstractions from the context under study. This is because past research likely did not fully consider the external and internal influences on a cognitive phenomenon, which may be subjectivized. Therefore, presenting a paradigmatic model helps to understand the phenomenon within the context of the study. This section describes the nature of the methodology of the present study based on the principles of paradigmatic phenomenology. Accordingly, during the interview process with experienced actors in the context of the study, the contexts that can influence the phenomenon in line with the five paradigmatic conditions, causal conditions, contextual, intervening, strategies, and consequences, are first identified, so that, through open coding, the subsequent steps can be taken to develop the final paradigmatic model. Therefore, the study employs two primary tools: (1) interviews to explore the context of the phenomenon based on open coding, and (2) checklist scoring scales to evaluate the emerged contexts and classify them into paradigmatic categories. In these explanations, the present study can be described as exploratory in terms of its purpose, which, given the novelty of the Ponzi phenomenon, is justified in identifying the influential contexts emphasized in the first research question. Conducting interviews with participants who have knowledge and experiential expertise, like puzzle pieces, reveals scientific unknowns of the phenomenon under study. In terms of outcomes, from another methodological perspective, the present study can also be considered developmental, as it addresses the lack of reliable cognitive approaches to the Ponzi phenomenon in accounting procedures and contributes to a clearer understanding of financial distortions and frauds. Finally, in terms of data collection, this study is classified as qualitative research with an inductive approach.
Result
This study began by selecting 20 participants with lived experience to identify the propositional themes that, through interviews with open-ended questions and codes derived from the Ponzi phenomenon, indicate the areas of this phenomenon that can influence the formation of opportunistic accounting practices. From the 20 interviews conducted, 371 open codes were identified, which were grouped into 50 propositional themes. These themes were evaluated using a researcher-developed scoring checklist within focus groups, which ultimately informed the final paradigmatic model.
Discussion
Paradigmatic phenomenology is recognized as a sociological approach within both theoretical and applied fields, drawing on areas of humanities knowledge where, due to the novelty of the central phenomenon, there is no coherent understanding within the context of the study. Accordingly, this study employs paradigmatic phenomenology with the aim of exploring the ontology of the Ponzi phenomenon in the formation of opportunistic accounting procedures in commercial companies. This phenomenon, as one of the domains of financial distortion and fraud in commercial companies, influences the emergence of opportunistic accounting as a hidden tool used by many companies in competitive financial markets. Due to its novelty, it lacks sufficient cognitive coherence in existing literature. For this reason, by following the analytical stages of the paradigmatic phenomenological process, the study aims to develop a model as the ultimate goal, in order to explore the influential aspects of the Ponzi phenomenon in the emergence of opportunistic accounting practices.
Conclusion
The results obtained from the final paradigmatic model regarding the ontology of the Ponzi phenomenon in the emergence of opportunistic accounting practices provide a foundation for the conceptual and abstract understanding of this phenomenon within the context of commercial companies. The lack of previous research on the theoretical and applied understanding of the existential philosophy of the Ponzi phenomenon has resulted in the connection between this phenomenon and accounting practices, as its implementation tool at the company level, being largely overlooked. For this reason, exploring the various dimensions of the occurrence of such a problem in accounting practices was among the main objectives of this study. This framework demonstrates how companies involved in implementing the Ponzi phenomenon, or so-called scammers (primary project designers), based on the profit obtained from attracting secondary investors, create an opaque financial cycle to provide the expected returns for primary investors. In doing so, they opportunistically pursue their interests using tools such as accounting, often within a set of inefficient market conditions.
Profitability
Mandana Taheri; Asma Sajedifar
Abstract
This study investigates the effect of earnings per share (EPS) disclosure pressure on the level of environmental information disclosure among companies listed on the Tehran Stock Exchange, with an emphasis on the moderating role of corporate governance. Using data from 110 firms over the period 2012-2023 ...
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This study investigates the effect of earnings per share (EPS) disclosure pressure on the level of environmental information disclosure among companies listed on the Tehran Stock Exchange, with an emphasis on the moderating role of corporate governance. Using data from 110 firms over the period 2012-2023 and employing a panel data approach, the results indicate that pressure to disclose EPS has a significant negative impact on environmental disclosure levels. Meanwhile, corporate governance mechanisms, through enhanced transparency and oversight, can help mitigate this adverse effect. However, the findings reveal that corporate governance has not been fully effective in moderating the negative influence of EPS disclosure pressure on environmental disclosures. These results provide valuable insights for policymakers and corporate managers aiming to strengthen governance frameworks and improve the quality of environmental reporting.
Introduction
In emerging capital markets, listed firms increasingly operate under dual, and potentially conflicting, pressures: capital market expectations to meet or exceed earnings per share (EPS) benchmarks, and growing stakeholder demands for transparent environmental reporting. While EPS targets sharpen the focus on short-term profitability, they may also create incentives to downplay or delay disclosures that highlight environmental risks and costs. Prior evidence on the relationship between earnings pressure and environmental disclosure is scarce and primarily drawn from developed markets, where regulatory enforcement and governance infrastructures differ markedly from those in developing economies. Against this backdrop, the present study examines whether EPS disclosure pressure reduces the extent of environmental disclosure and explores the potential moderating role of selected corporate governance mechanisms in the context of the Tehran Stock Exchange.
Literature Review
The literature on sustainability reporting highlights environmental disclosure as a primary channel through which firms seek legitimacy, respond to regulatory and societal pressures, and communicate long-term strategic commitments. Studies grounded in legitimacy theory suggest that firms expand environmental reporting when facing public scrutiny, whereas agency-based analyses emphasize that managers may strategically withhold or bias such information if it threatens their private benefits. Research on earnings pressure shows that managers under tight EPS targets may engage in real activities management, accrual manipulation, or selective disclosure to maintain a favourable financial narrative, but only a few studies explicitly link EPS-related pressures to non-financial reporting, particularly environmental disclosure. At the same time, corporate governance characteristics, such as institutional ownership, board independence, and CEO tenure, are argued to constrain opportunistic behaviour and enhance transparency, although evidence from emerging markets indicates that governance structures may be less effective where ownership is concentrated, and investor protection is weak. This study extends the literature by integrating these strands into a single framework and providing evidence from an underexplored institutional setting.
Methodology
The empirical analysis is based on an unbalanced panel of 110 non-financial firms listed on the Tehran Stock Exchange over the period 2012–2024. Environmental disclosure is measured using a six-item checklist applied to annual reports and board of directors’ reports, covering pollution prevention, waste reduction, recycling initiatives, conservation of natural resources, compliance with environmental regulations, and investments in environmentally friendly technologies. The firm-year disclosure index is calculated as the ratio of disclosed items to the total number of items. EPS disclosure pressure is operationalized as a composite index obtained via factor analysis of several proxies that capture both financial dynamics and managerial incentives, including EPS growth pattern and volatility, overinvestment as a proxy for managerial overconfidence, managerial ability scores derived from a data envelopment analysis framework, industry competition measured by a sales-based Herfindahl–Hirschman index, and a market-specific investor sentiment indicator. Corporate governance is captured through a separate factor-based index that combines the presence of institutional blockholders, the proportion of independent directors on the board, and CEO stability, defined as the absence of CEO turnover in the previous two years. Panel regression models with firm and year fixed effects are estimated, controlling for firm size, leverage, profitability, loss status, inventory and receivables intensity, auditor size, audit opinion type, and liquidity. Standard panel-data diagnostics and robust estimation techniques are employed to address multicollinearity, autocorrelation, and heteroskedasticity.
Results
The regression results show a negative and statistically significant association between EPS disclosure pressure and the level of environmental disclosure, indicating that firms exposed to stronger pressure to maintain favourable EPS figures tend to provide less extensive environmental information. This effect remains robust across alternative specifications and after controlling for firm-specific, industry, and time-varying factors. The composite corporate governance index exhibits a positive and significant relationship with environmental disclosure, suggesting that firms with higher institutional ownership, more independent boards, and more stable executive leadership are generally more inclined to report on environmental issues. However, the interaction term between EPS disclosure pressure and the governance index is not statistically significant, implying that the selected governance mechanisms do not materially mitigate the adverse impact of EPS pressure on environmental disclosure. Additional sensitivity analyses confirm that the main inferences are not driven by outliers, alternative variable definitions, or different estimation approaches.
Discussion
These findings suggest that, in the examined emerging-market context, environmental disclosure is treated by managers as a discretionary margin that can be curtailed when the pressure to meet EPS expectations intensifies. From a legitimacy-theory perspective, managers appear to prioritize the short-term legitimacy gained from delivering target EPS over the longer-term legitimacy associated with transparent environmental reporting. From an agency-theory viewpoint, the results reflect a misalignment between shareholders’ broader interest in credible sustainability disclosure and managers’ incentives tied to short-term financial performance. The positive direct effect of corporate governance on environmental disclosure indicates that stronger monitoring and oversight can foster more extensive reporting; yet the lack of a significant moderating effect reveals the limitations of these governance arrangements when confronted with intense EPS pressure. In markets characterized by concentrated ownership, evolving regulation, and relatively weak enforcement, formal governance structures may improve average transparency but remain insufficient to prevent managers from sacrificing environmental communication under earnings stress.
Conclusion
The study contributes to the literature by developing a multidimensional measure of EPS disclosure pressure, focusing specifically on environmental disclosure in an emerging capital market, and assessing the conditional role of corporate governance. The evidence shows that EPS-related pressures systematically undermine environmental transparency, and that conventional governance attributes, while beneficial on average, do not fully counteract this effect. These insights have important policy implications: regulators and standard setters may need to strengthen environmental reporting requirements, refine enforcement mechanisms, and encourage performance evaluation frameworks that balance EPS outcomes with sustainability metrics. Boards and institutional investors should also reconsider compensation and monitoring practices that place excessive weight on short-term earnings targets and pay closer attention to the consistency and completeness of environmental disclosures. Future research could extend this analysis by exploring alternative dimensions of sustainability reporting, employing dynamic panel estimators to better address endogeneity concerns, and conducting cross-country comparisons to examine how institutional differences shape the interplay between earnings pressure, governance, and environmental disclosure.
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