Header image

Corporate political activism and accounting measurement intensity

Tracks
Crystal 2
Monday, July 1, 2024
8:30 AM - 8:45 AM

Presenter

Agenda Item Image
Dr Sohanur Rahman
Lecturer
Queensland University of Technology

Corporate political activism and accounting measurement intensity

Abstract

This study examines whether political activism is associated with the accounting measurement intensity (AMI) problem. AMI-intensive firms are characterised by a greater level of discrepancies or deviations between the recorded values of financial transactions and the true economic values they represent according to the mandatory accounting reporting standards. As corporate political activism diverts managerial attention and valuable financial resources from routine to political activities, this study predicts that politically active firms will be characterised by greater AMI. Based on a US sample of 30,928 firm-year observations, this study finds that political activism, measured by lobbying expenditures, has a positive association with AMI. The association is pronounced for the firms receiving Securities and Exchange Commission comment letters in the earlier year. The association is stronger for the firms receiving comment letters consecutively in the last two years. A difference-in-differences estimation technique on the Jack Abramoff lobbying scandal is employed to address the potential reverse causality problem. The Random Forest and Extreme Gradient Boosting machine learning algorithms support the baseline results. The results remain robust to other endogeneity tests. The findings could interest policymakers in revisiting the regulatory framework related to corporate political activities due to its potential impact on accounting practices. The findings can also be interesting to auditors requiring rigorous auditing and compliance checks for firms heavily involved in political activities.

Biography

Sohanur Rahman is a Lecturer at the QUT School of Accountancy in the Faculty of Business and Law. He holds a PhD in Accounting from QUT and a Master of Business (Research) from RMIT University. His teaching profile includes Financial Accounting, Auditing & Assurance, and Accounting Information Systems units. His research interest covers the intersection between financial accounting and corporate finance, with a specific focus on econometric analyses of corporate environmental sustainability, political activism, and textual analysis of corporate reporting. His research outputs appear in the Journal of Business Finance and Accounting, Economic Modelling, Sustainability Accounting, Management and Policy Journal, and Business Strategy and the Environment. His research papers also appeared in the Financial Market and Corporate Governance Conference 2024 (FMCG, Kuala Lumpur, Malaysia), American Accounting Association Annual Meeting 2022 (AAA, San Diego, California, USA), 41st Annual Congress of the European Accounting Association 2018 (EAA, Milan, Italy). He has established research collaborations with colleagues at QUT, as well as researchers from various Australian and international institutions.

Chair

Agenda Item Image
ROMALANI LEOFO
Asociate Lecturer
The Australian National University

loading