Papers by Panagiotis Dimitropoulos
International Journal of Economics and Finance, 2009
The relationship between earnings figures and stock returns has been a topic of international res... more The relationship between earnings figures and stock returns has been a topic of international research since decades. The purpose of this paper is to investigate the above relationship in the context of the Greek capital market. Previous studies resulted in controversial results regarding the usefulness of models which were using earnings levels or earnings changes as the explanatory variable. In an introductory context, this study examines the earnings-return relation applying four models, proposed by Kothari and Zimmerman (Journal of Accounting and Economics, 20, 155-192, 1995), on individual Greek stocks as well as portfolios between 1994-2004. The overall results, demonstrated a significant value relevancy of accounting earnings prepared under the Greek GAAP. Specifically in the Greek stock market the price model produces less biased ERC's than the return model but suffers from various econometric problems. Also, the use of cross-sectional and time-series aggregated data results in a large increase in the explanatory power of earnings for returns (for the return and differenced model) yielding more significant Earnings Response Coefficients.
International Journal of Accounting, Auditing and Performance Evaluation, 2015
Review of Accounting and Finance, 2008
Purpose–This paper's aim is twofold: first, it seeks to examine the impact of financial ... more Purpose–This paper's aim is twofold: first, it seeks to examine the impact of financial transparency on the returns-earnings relation and second, to test for the existence of conservative accounting between 1995 and 2004. Design/methodology/approach–The data were collected from a sample of 105 non-financial firms listed at the Athens Stock Exchange and were analyzed using ordinary least square (OLS) regression models.
Managerial Auditing Journal, 2009
Purpose–The aim of this paper is to examine the relevance of financial reporting. In order to ach... more Purpose–The aim of this paper is to examine the relevance of financial reporting. In order to achieve this, a model that includes specific ratios is developed, which have proved to be indicators of falsified financial statements in the Greek capital market, and by estimating accruals quality, measured both by discretionary and non-discretionary accruals. Design/methodology/approach–The data were collected from a sample of 101 non-financial firms listed at the Athens stock exchange. The time frame spans from 1995 to 2004 and ...
Journal of Financial Services Research, 2011
Prior research has shown that loan loss provisions are primarily used as a tool for earnings mana... more Prior research has shown that loan loss provisions are primarily used as a tool for earnings management and capital management by listed banks. Effective 2005 all listed companies in the European Union (EU) are required to comply with International Financial Reporting Standards (IFRS). Adherence to IFRS, it is claimed, should enhance transparency of reporting practices relative to local General Accepted Accounting Principles (GAAP). The overall objective of this paper is to examine the impact of the implementation of IFRS on the use of loan loss provisions (LLPs) to manage earnings and capital. We use a sample of 91 EU listed commercial banks covering a period of 10 years (before and after implementation of IFRS). Since early adopters may have different incentives and motivations relative to those who adopt mandatorily, we dichotomize our sample into early and late adopters. Overall, we find that earnings management (using loan loss provisions) for both early and late adopters while significant over the estimation window is significantly reduced after implementation of IFRS. We also find that, for risky banks, earnings management behavior is more pronounced when compared to the less risky banks, but is significantly reduced in the post IFRS period. Capital management behavior by bank managers is not significant in both pre and post IFRS regimes. Overall, we conclude that the implementation of IFRS in the EU appears to have improved earnings quality by mitigating the tendency of bank managers of listed commercial banks to engage in earnings management using loan loss provisions.
Journal of Economic Studies, 2012
ABSTRACT Purpose – The purpose of this paper is to investigate whether bank managers of countries... more ABSTRACT Purpose – The purpose of this paper is to investigate whether bank managers of countries within the European Union (EU) engage in signalling, especially after implementation of international financial reporting standards (IFRS) commencing 2005. Design/methodology/approach – “Signaling” is the use of loan loss provisions (LLPs) to convey signals of fiscal prudence and future profitability to investors. The authors use data from 18 countries across the EU covering the pre and post IFRS regimes and apply univariate and multivariate tests in order to test signaling behavior under both accounting regimes. Findings – The findings indicate insufficient evidence that financially healthy banks engage in signaling behavior. However, banks facing financial distress appear to engage in aggressive signaling relative to healthy banks. Finally, the propensity to engage in signaling behavior is more pronounced for financially distressed banks in the post IFRS regime. While IFRS, under IAS 39 sort to mitigate the discretionary component of LLPs, our finding may be attributable to lax enforcement of IFRS. Practical implications – The findings have implications for both investors and regulators. Investors should be aware that troubled banks engage in signaling to convey positive information about their future prospects. Regulators should be aware that financially stressed banks have a greater propensity to engage in signaling and need to ensure that the provisions of IFRS (which attempts to limit discretion in estimating LLPs) are enforced more stringently. Originality/value – The paper contributes to the growing literature on bank signaling in a number of ways. First, the authors use a sample from 18 countries within the EU which has not been done before. Second, unlike prior studies which only examined healthy banks, the authors also include financially distressed banks in the sample. Third, the authors examine signaling behavior in the pre and post IFRS regimes to understand the influence of IFRS on the propensity to engage in signaling by bank managers.
Journal of Applied Accounting Research, 2010
Purpose–The aim of this paper is twofold: first, it aims to examine the relevance of earnings and... more Purpose–The aim of this paper is twofold: first, it aims to examine the relevance of earnings and book values on stock prices, and second, to test for the effect of speculative intensity on the relevance of accounting information between 1995 and 2004. Design/methodology/approach–The data were collected from a sample of 101 non-financial firms listed at the Athens Stock Exchange over the period 1996-2004 and were analyzed using OLS regression models.
Journal of Applied Accounting Research, 2012
ABSTRACT Purpose – The purpose of this research paper is to investigate the role of corporate gov... more ABSTRACT Purpose – The purpose of this research paper is to investigate the role of corporate governance in earnings management behaviour by US listed banks during the era of the Sarbanes-Oxley Act (2003-2008). Design/methodology/approach – The paper examines the issue of accounting quality and corporate governance within banking corporations through the use of two different measures of earnings management, namely small positive net income and the difference between discretionary realized security gains and losses and discretionary loan loss provisions (LLPs), by applying a corporate governance index estimated from 63 governance provisions. Findings – The research found convincing evidence that banks with efficient corporate governance mechanisms report small positive income to a lesser extent than banks with weak governance efficiency. Also well-governed banks engage less in aggressive earnings management behaviour through the use of discretionary loan loss provisions and realized security gains and losses. Practical implications – The findings could prove to be valuable to investors since they must take into consideration the efficiency of each bank's corporate governance and demand supplementary information in order to reach a better investment decision when earnings are not highly informative. Social implications – The findings could prove to be useful for regulators since they are responsible for the acceptable level of corporate governance standards. Thus, they must consider strengthening governance mechanisms either though new legislation or stronger enforcement where earnings management is of such magnitude to that serious impedes information transparency and quality. Originality/value – The present study aims to bridge a gap in the literature by investigating corporate governance and earnings management behaviour during a period of transition to an intensively legalized governance environment (SOX Act). The results contribute further evidence to the ongoing debate about the effectiveness of established corporate governance mechanisms.
International Journal of Accounting and Finance, 2009
This study investigates the informational content of losses and their effect on the association b... more This study investigates the informational content of losses and their effect on the association between earnings and stock returns. Previous studies demonstrated that losses are less informative than positive earnings since they are not expected to prolong (Hayn, 1995). Our results prove that this hypothesis is existent in the Greek capital market. Additionally, the results indicate that the frequency of losses varies with firm size. Also, the estimated Earnings Response Coefficients (ERC) increases as the measurement interval of ...
Corporate Governance: An International Review, 2013
Research Question/Issue: In this paper, we empirically investigate whether US listed commercial b... more Research Question/Issue: In this paper, we empirically investigate whether US listed commercial banks with effective corporate governance structures engage in higher levels of conservative financial accounting and reporting. Research Findings/Insights: Using both market-and accrual-based measures of conservatism and both composite and disaggregated governance indices, we document convincing evidence that well-governed banks engage in significantly higher levels of conditional conservatism in their financial reporting practices. For example, we find that banks with effective governance structures, particularly those with effective board and audit governance structures, recognize loan loss provisions that are larger relative to changes in nonperforming loans compared to their counterparts with ineffective governance structures. Theoretical/Academic Implications: We contribute to the extant literature on the relationship between corporate governance and quality of accounting information by providing evidence that banks with effective governance structures practice higher levels of accounting conservatism. Practitioner/Policy Implications: The findings of this study would be useful to US bank regulators/supervisors in improving the existing regulatory framework by focusing on accounting conservatism as a complement to corporate governance in mitigating the opaqueness and intense information asymmetry that plague banks.
Managerial Auditing Journal, Mar 16, 2012
Purpose–The purpose of this paper is to consider the impact of the drachma's replacement by ... more Purpose–The purpose of this paper is to consider the impact of the drachma's replacement by the euro on the quality of accounting information published by Greek listed firms. Design/methodology/approach–The authors examined how the adoption of the euro currency impacted on the timeliness of income recognition and the relevance of accounting information during the pre and post euro adoption periods using a sample of 176 listed firms over the period 1995-2008.
International Journal of Accounting, Auditing and Performance Evaluation, 2009
This paper aims at examining the impact of earnings and cash flows relevance on stock return move... more This paper aims at examining the impact of earnings and cash flows relevance on stock return movements within the Greek capital market from 1996 to 2004. Results indicated that earnings have higher incremental importance in explaining stock return movements compared with cash flows as earnings have been found to affect stock returns positively. Additionally, tests on the incremental informativeness of cash flows when earnings are transitory did provide significant results suggesting that investors seek for alternative ...
Research in International Business and Finance, Jun 30, 2010
This study examines how the informational quality of annual accounting earnings, varies according... more This study examines how the informational quality of annual accounting earnings, varies according to the size and composition of the board of directors of publicly listed firms within the Greek capital market. Data analysis over a period of five years (2000–2004) revealed that the informativeness of annual accounting earnings is positively related to the fraction of outside directors serving on the board, but it is not related to board size. Additionally, firms with a higher proportion of outside board members proved to be more conservative when ...
AFRICAN JOURNAL OF BUSINESS MANAGEMENT, 2012
This paper examines the relation between earnings management and corporate governance in China by... more This paper examines the relation between earnings management and corporate governance in China by introducing a tunneling perspective. We document systematic differences in earnings management across the universe of China's listed companies during 1999-2005, and empirically demonstrate that firms with higher corporate governance levels have lower levels of earnings management. We study two Chinaspecific situations, in which the listed firms have strong incentives to manage earnings in order to meet certain return on equity (ROE) thresholds, and earnings management has been shown to be the most conspicuous. We identify tunneling evidence for each. Our empirical findings, although not being able to completely exclude other explanations, strongly suggest that agency conflicts between controlling shareholders and minority investors account for a significant portion of earnings management in China's listed firms.
Advances in Accounting, 2013
ABSTRACT This paper examines the impact of IFRS adoption on the quality of accounting information... more ABSTRACT This paper examines the impact of IFRS adoption on the quality of accounting information within the Greek accounting setting. Using a sample of 101 firms listed in the Athens Stock Exchange (ASE) for a period of eight years (2001–2008) we find convincing evidence that the implementation of IFRS contributed to less earnings management, more timely loss recognition and greater value relevance of accounting figures, compared to the local accounting standards. Also, our findings document that audit quality further complements the beneficial impact of IFRS since those companies that are audited by Big-5 audit firms exhibit higher levels of accounting quality. Our findings are robust in regard to different model specifications and after controlling for firm-specific effects like size, risk, profitability and growth opportunities.
Advances in Accounting, 2010
Prior research has pointed to the importance of the determinants of audit pricing. This paper exa... more Prior research has pointed to the importance of the determinants of audit pricing. This paper examines empirically the effect of both audit independence and earnings management on the audit pricing by companies listed on the Athens Stock Exchange. This test is performed in an institutional setting with excessive earnings management and poor corporate governance mechanisms. The results based on a sample of 97 Greek companies for a five-year period (2000)(2001)(2002)(2003)(2004), show that there is a positive association between audit independence and auditing pricing. Our results also indicate a positive association between audit pricing and earnings management for the small size companies. Taken together our results suggest that strong governance is related to increased needs for quality assurance services and that the relation between earnings management and audit pricing might indicate potential red flags. Finally, limitations, suggestions for further research and policy implications for regulatory agencies are offered.
Advances in Accounting, 2010
This study examines the informational quality of annual accounting earnings within Greek banking ... more This study examines the informational quality of annual accounting earnings within Greek banking institutions taking into consideration the most significant risks facing by such firms and specifically interest rate risk, credit risk, liquidity risk and solvency risk, alongside with the persistence of earnings and bank size as significant determinants of ERCs. Data analysis over a period of ten years (1995–2004)
Global Business and Economics Review
The scope of this paper is to examine the relation between the athletic and financial performance... more The scope of this paper is to examine the relation between the athletic and financial performance of Greek football clubs and how the investment in player contracts (playing talent) impacts this relation. We selected a sample of 20 football clubs participating in the three professional divisions of the national championship, which refers to the period from 2004/05 to 2008/09. By applying a panel data methodology, results indicated that the higher the investment in player contracts is, the more successful is the club on the field. However, as the investment in player contracts by football managers is increased, the club is becoming more unprofitable and insolvent suggesting that these decisions are not based on economic standards, a fact which verifies previous arguments that football clubs in Europe aim to maximise the athletic performance and not the financial. Useful policy implications and avenues for future research are also provided.
CHOREGIA, 2007
Costing systems in recent years have shown a significant development and activity-based costing (... more Costing systems in recent years have shown a significant development and activity-based costing (ABC) specifically has been considered as a major contribution to cost management, particularly in service businesses. The sport sector is composed to a great extent of service functions, yet considerably less have been reported of the use of activity based costing to support cost management in sport organizations. Since the power of information becomes continuously crucial for the implementation of effective business administration, the traditional methods of cost measurement proved insufficient on this issue, leading to the invention of ABC. The aim of this paper is twofold. First of all we want to present the main theoretical background of ABC and its substantiated benefits, and secondly to present some practical steps for the implementation of ABC in sport organizations.
CHOREGIA, 2010
In this study, we examine the factors which contribute to the financial performance of clubs in t... more In this study, we examine the factors which contribute to the financial performance of clubs in the Australian Football League over the period from 1993 to 2002. Primarily, we examine the association between the on-field football performance of clubs and their level of off-field financial success. We find that match attendance is positively related to both short-term and long-term success of football clubs and also to match uncertainty. We also find club membership is highly persistent and is positively related to both the success of the club and marketing expense undertaken.
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Papers by Panagiotis Dimitropoulos