Juha Kinnunen

• D.Sc. (Econ.)
• Professor Emeritus at Aalto University

Defining company performance is a key issue in the debate between shareholderism versus stakeholderism. Formerly opposing views have converged since Jensen (2002) initiated the shift from shareholder primacy to considering other financiers as well, and Freeman et al. (2004) defined total value creation as an objective function for a firm. By introd...

Using a sample covering practically all dividend-paying small and medium-sized private companies in Finland during 2006–2010, we document that earnings management in these companies is driven by two concurrent forces: the willingness to pay (tax-exempt) dividends and avoiding unnecessary company income tax. Moreover, we show that the need for incom...

This study examines the effect of tax aggressiveness and voluntary audit of financial statements on the likelihood of tax adjustments in small private companies. We provide evidence that (a) tax aggressiveness increases the likelihood of the tax authority not accepting taxable income as reported, whereas (b) voluntary audit decreases it. To derive...

Radhakrishnan and Janakiraman (hereafter RJ) provide an insightful and constructive discussion on our paper. In what follows, we briefly comment on some of the main points they take up in their discussion.

The purpose of this study is to uncover additional determinants of the demand for voluntary audit in micro-companies by investigating the internal management factors that have not yet been explored in prior literature. The hypotheses are developed from the literature and interviews with owner-managers of such companies, bank lenders and the tax aut...

Purpose – The purpose of this paper is to examine novel corporate governance-based determinants of risk disclosures among index-listed Finnish companies. Therefore the focus of the study is on explaining the board’s monitoring role in relation to corporate managers. Design/methodology/approach – Firms’ risk disclosures are analysed in terms of the...

Using a large proprietary data set from the internal records of the Finnish Tax Administration for the fiscal year 2011, we examine the factors that trigger adjustments by the tax authority to the taxable income reported by around 25,000 small private companies. Using that data, we develop a new direct measure of tax aggressiveness and introduce th...

This study investigates the extent to which the pressures from outside stakeholders, specifically the providers of debt and trade credit, as opposed to owner-managers’ internal needs explain the use of voluntary audits in micro-companies. Whereas previous studies have mainly focused on how bank debt affects the demand for voluntary audit in small a...

This paper examines factors affecting the owner-manager’s voluntary decision to hire an auditor in small firms. Using a random sample of 412 small private companies in Finland responding to an Internet survey, we first probe the institutional boundaries of a prior UK study [Collis et al., 2004] and conclude that its main findings can be generalised...

The usefulness of segment reporting is grounded on the presumption of diversities of returns and risks across reported segments. We examine the effect of country-specific factors, reporting incentives, and choices on an ANOVA-based measure of cross-segment diversities (CSD) in risk and returns for a sample of Japanese and U.S. multi-segment firms....

Using a sample of approximately 87,000 earnings observations from almost 22,000 firms in 18 countries for the five-year period 1995-1999, we document firm' tendency to exercise cosmetic earnings management (CEM) worldwide. Following prior studies in the area (Thomas, 1989, among others), we define CEM by small upward rounding of reported net income...

Using a sample of approximately 87,000 earnings observations from almost 22,000 firms in 18 countries for the five-year period 1995-1999, we document firms' tendency to exercise cosmetic earnings management (CEM) worldwide. Following prior studies in the area (Thomas, 1989, among others), we define CEM by small upward rounding of reported net incom...

Using data for a sample of listed Finnish firms for 1995-97 this paper examines the coincidence of reported cash flows with corresponding cash flows estimated from income statement and balance sheet data. The issue is important in light of prior empirical studies that have analysed the properties and usefulness of cash flow information derived from...