Workshop Title:

Brexit and Earnings Management

Date:

October 18th, 2023 (GMT+1)

Organizer:

University of Aberdeen Business School

Keywords:

• Brexit
• Policy Uncertainty
• Real Activities Manipulation
• Earnings Management

Workshop Chair:

Personal Bio:

Dr. Naser Makarem is an assistant professor in accounting at the University of Aberdeen, UK. He is the leader of MSc Accounting and Finance programme and Partnerships Programmes Director at Aberdeen Business School. Dr. Makarem teaches several courses in the area of financial accounting both in the UK and at overseas partners in China and Qatar. He supervises PhD students and has research interests in the broad area of financial reporting and particularly earnings management.

Dr. Makarem's research mainly focuses on factors influencing corporate financial reporting. In particular, he studies how social, economic and political factors affect earnings management. He is also interested in changes in earnings management behaviour over time as well as the impact of regulatory environment and political and economic factors on such changes. He also studies how earnings manipulation is restricted by factors such as external audit and corporate governance. More recently, he has started some projects on the impact of corporate social and environmental responsibility on financial reporting and non-financial disclosures, particularly corporate human rights disclosures.

Workshop Description:

Background:

In June 2023 the UK decided to leave the European Union. This was not just a political decision, but also a change in the steering of the UK with considerable social and economic implications for the British firms. However, the direction and magnitude of the likely changes brought upon by Brexit remain contentious. The policy uncertainty created by Brexit is expected to affect the performance and behavior of British firms. Several measures of earnings management and a difference-in-differences design are used to compare the earnings management of firms most adversely affected by the policy uncertainty brought by Brexit to less affected firms.

Goal/Rationale:

This workshop is based on a recent study the investigates the impact of Brexit on earnings management by UK firms. While Brexit referendum took place in 2016, even 6 years after the vote there is still hot debate in the UK and at the global level on its implication given its significant impact on UK and other countries. Brexit created a substantial, widespread and long-standing increase in uncertainty in the UK, which differs from prior uncertainty shocks (e.g., oil prices in 1973, Gulf War I and II, September 11 attacks, etc.) as the majority of uncertainty shocks recede reasonably swiftly and/or are related to an economic recession. Such factors make Brexit a unique uncertainty shock.

Such factors make Brexit a unique uncertainty shock. There have been few studies examining the relationship between political uncertainty and earnings management. However, they do not provide causal evidence and at best provide evidence of an association between policy uncertainty and earnings management. This workshop is based on a study that is the first to provide causal evidence between policy uncertainty and earnings management.

Scope and Information for Participants:

Policy uncertainty is an area of research that crosses many disciplines. This workshop will be of interest to a wide range of audience considering the nature of the topic including researchers and students in the areas of business studies including economic, finance, accounting and management. It is perhaps of particular interest to accounting and finance researcher who are interested in earnings management and the factors affecting financial reporting behavior of firms.

Highlights:

The workshop titled "Brexit and Earnings Management" was a resounding success, taking place on October 18, 2023, at the Sir Duncan Rice Library, University of Aberdeen, Scotland. The event garnered significant interest from a diverse array of participants from various professional backgrounds.

A notable highlight of the workshop was the presentation of research featured in the paper titled "Policy Uncertainty and Real Activities Manipulation: Evidence from Brexit." This paper, recently accepted for publication in the esteemed Review of Quantitative Finance and Accounting (recognized with a prestigious 3-star rating by the Chartered Association of Business Schools), provided valuable insights into the impact of policy uncertainty on real activities manipulation in the context of Brexit.

The speaker, an assistant professor of accounting at the University of Aberdeen, delivered an illuminating overview of the existing literature and the research findings. Moreover, the presentation delved into the potential policy implications of the research, offering a comprehensive perspective on the implications for the field.

Engagement and enthusiasm among attendees were palpable throughout the workshop, fostering vibrant discussions both during and after the presentation. The exchange of ideas among the participants contributed to the event's overall success, making it an enriching experience for all involved.

Access to Workshop:

ICFTBA 2023 Workshop -- Aberdeen - YouTube

Venue:

University of Aberdeen, King's College, Aberdeen AB24 3FX, UK

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