The impact of corporate governance and external audit on compliance to mandatory disclosure requirements in China

Although there has been considerable research on the impact of corporate governance on corporate voluntary disclosure, empirical evidence on how governance affects compliance with mandatory disclosure requirements is limited. We contribute to governance and disclosure literature by examining the impact of corporate governance on compliance with IFRS 7 for the banking sector in Gulf Cooperation Council (GCC). We use a self-constructed disclosure index to measure compliance with IFRS 7. We use regression analyses to examine the impact of board characteristics, audit committee characteristics and ownership structure on compliance with IFRS 7. Using a sample of 335 bank-year observations for GCC listed banks over the period 2011–2017, we report evidence that corporate governance variables affect compliance with IFRS 7. However, the significance of these variables depends on the type of the regression model used. Our findings suggest that governance matters for mandatory disclosure requirements. So to improve the level of compliance, regulators, official authorities, and policymakers should intensify their efforts toward improving corporate governance codes, following up their implementation and enhancing the enforcement mechanisms.

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The association between corporate governance mechanisms and compliance with IFRS mandatory disclosure requirements: evidence from 12 African countries

Corporate Governance ◽

10.1108/cg-08-2019-0270 ◽

2020 ◽

Vol 20 (7) ◽

pp. 1371-1392

Author(s):

Yosra Mnif ◽

Hela Borgi

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Audit Committee ◽

Mandatory Disclosure ◽

African Region ◽

African Countries ◽

Content Type ◽

Disclosure Requirements ◽

The Board Of Directors ◽

Expected Benefits

Purpose The purpose of this study is to examine the association between two corporate governance (CG) mechanisms, namely, the board of directors and the audit committee (AC) and the compliance level with International Financial Reporting Standards (IFRS) mandatory disclosure requirements across 12 African countries. Design/methodology/approach This paper uses a self-constructed checklist of 140 items to measure the compliance with IFRS mandatory disclosure requirements (here after, COMP) of 202 non-financial listed firms during the 2012–2016 period. This paper applies panel regressions. Findings The findings reveal that CG mechanisms play an important role in enhancing compliance with IFRS in the African context. The results show that board independence, AC independence and the number of meetings held by the AC are positively associated with COMP. Regarding expertize, this paper find that AC industry expertise along with accounting financial expertise is associated with a higher level of COMP than accounting financial expertize alone. These results show the importance of the CG mechanisms to enforce African companies to fully comply with IFRS required disclosures. Practical implications The findings should give a signal to supervisory authorities that more effort is necessary to enforce IFRS across African countries if the introduction of IFRS is to bring the expected benefits to investors and other users. Hence, the lack of full compliance should remain a concern for regulators, professional accounting bodies and policymakers. Originality/value This study contributes to the literature by providing further insights that, within the African region an understudied context, extend current understanding of the association between CG mechanisms and COMP.

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Corporate governance and provisions under IAS 37

EuroMed Journal of Business ◽

10.1108/emjb-03-2016-0007 ◽

2017 ◽

Vol 12 (1) ◽

pp. 52-72 ◽

Cited By ~ 6

Author(s):

Ece Acar ◽

Serdar Ozkan

Keyword(s):

Developing Countries ◽

Corporate Governance ◽

Board Of Directors ◽

Mandatory Disclosure ◽

Full Disclosure ◽

Content Type ◽

Corporate Reporting ◽

Concentrated Ownership ◽

Disclosure Requirements ◽

Institutional Owners

Purpose The purpose of this paper is to illustrate the extent of disclosure of provisions reported under IAS 37 provisions, contingent liabilities and contingent assets and explore the relation between provisions and corporate governance. Design/methodology/approach The current research utilizes a panel data analysis using a sample of 1,078 firm-year observations from Borsa Istanbul between the years 2005 and 2010. Findings Overall findings indicate that 62 percent of 1,078 firm-year observations recognize provisions, and among those, only 32 percent provide IAS 37’s full disclosure requirements. Firms that recognize provisions have larger board of directors and are more likely to be characterized with concentrated ownership and institutional owners. Also, firms with larger board of directors, greater independence and concentrated ownership have higher total provision/total debt ratios. Finally, firms that make full disclosure of provisions are more likely to have larger boards, higher ownership concentration and institutional owners and less likely to have CEO duality. Research limitations/implications As with all research, there are several limitations of this study. The study suffers from a lack of literature about provisions under IAS 37. The lack of literature directly focusing on provisions or IAS 37 appears to be one of the main limitations as well as one of the main contributions. Since this study focuses on one country, the comparison is not possible. Further research may contribute to literature by the use of other emerging economy’s capital market data. Moreover, further research can cover any other mandatory disclosure information specified in IASs/IFRSs and can provide comparative results about the compliance and strictness of the mandatory disclosure regime. Practical implications This study can be of interest to government, investors, business management, regulatory bodies, educators, researchers, accountants, auditors and scholars particularly in the field of accounting by seeking to make theoretical and practical contributions in the area of accounting disclosures and also serves as benchmark for future researches on corporate disclosures. Also this study provides significant insights to accounting regulators who set disclosure requirements. Originality/value Accurate corporate reporting is a necessary tool for the short- and long-term survival of the firms, hence the capital markets. Studying the level of disclosure will enable us to have additional insights about corporate reporting and will enhance the understanding of the nature of corporate reporting in developing countries. Disclosure practices by developing countries were empirically investigated in the past; however, the relation between provisions under IAS 37 and corporate governance has been unexplored in the literature. Thus, to the best of the authors’ knowledge, this is a pioneering research on provisions and corporate governance structure.

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The Impact of Audit Committee and Internal Audit towards Financial Statement Quality: External Audit and Corporate Governance as Intervening Variables

International Journal of Engineering & Technology ◽

10.14419/ijet.v7i4.34.23890 ◽

2018 ◽

Vol 7 (4.34) ◽

pp. 208

Author(s):

Islahuzzaman . ◽

Syafdinal . ◽

Syakieb Arsalan ◽

Maya Lisa Aryanti

Keyword(s):

Corporate Governance ◽

Theoretical Model ◽

Audit Committee ◽

Internal Audit ◽

Financial Statements ◽

Financial Statement ◽

External Audit ◽

The Impact ◽

Intervening Variables

A financial statement is a crucial matter since its quality is declining. This research developed and tested a theoretical model which identified factors directly or indirectly contributing to the financial statement quality, namely audit committee and internal audit; meanwhile, external audit and corporate governance were considered as antecedent factors having impact on the report. The objective of the research is to gain insight on such factors. The objective of the research is to gain insights on factors that affect such reports. The findings showed consistent evidence supporting the theoretical model. They also showed how AC and IA simultaneously and partially impacted the quality of financial statements (QFS). AC and IA directly or indirectly affect the quality of the financial statement. They also have indirect effects through CG and EA in enhancing the quality to 77%.

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The effect of ifrs enforcement factors on analysts’ earnings forecasts accuracy

Corporate Ownership and Control ◽

10.22495/cocv13i1c2p5 ◽

2015 ◽

Vol 13 (1) ◽

pp. 266-282 ◽

Cited By ~ 1

Author(s):

Nadia Cheikh Rouhou ◽

Fatma Wyème Ben Mrad Douagi ◽

Khaled Hussainey

Keyword(s):

Corporate Governance ◽

Forecast Accuracy ◽

Earnings Forecasts ◽

Board Members ◽

Earnings Forecast ◽

External Audit ◽

Corporate Governance Mechanisms ◽

Mandatory Adoption ◽

The Impact

This paper examines the effect of IFRS mandatory adoption by French companies on analysts’ earnings forecast accuracy. In addition, we consider the impact of corporate governance mechanisms, as IFRS enforcement factors, on earnings forecasts. Using a sample of 98 companies over the period from 2003 to 2007, our results show increased forecast accuracy after the mandatory adoption of IFRS. We also find that the independence, the international competency and the efficiency of the board members, the board size, and the quality of external audit are important factors for the implementation of IFRS and, these factors improve earnings forecast accuracy.

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Determinants of compliance with mandatory disclosure: Research evidence

Corporate Ownership and Control ◽

10.22495/cocv15i2art8 ◽

2018 ◽

Vol 15 ◽

pp. 91-98 ◽

Cited By ~ 2

Author(s):

Sónia Fernandes ◽

Isabel Lourenço

Keyword(s):

Corporate Governance ◽

Voluntary Disclosure ◽

Research Evidence ◽

Economic Benefits ◽

Future Research ◽

Mandatory Disclosure ◽

Explanatory Factors ◽

Disclosure Requirements ◽

Country Characteristics

This study analyses research evidence on the determinants of compliance with mandatory disclosure requirements, classified in four main areas: business characteristics, country characteristics, enforcement and corporate governance. The literature concerning the compliance with mandatory disclosure requirements is a relatively recent field of research when compared to the literature on voluntary disclosure. Given the well-known economic benefits of disclosure, it is of great interest to academics and practitioners to understand the incentives that explain the behaviour of firms in terms of compliance with disclosure requirements. This review provides several insights. First, although the business characteristics found in different studies as explanatory factors for the level of compliance are not always the same, there are four business characteristics that predominate as explanatory factors of the level of compliance with disclosure requirements: the firm’s size, the firm’s profitability, the type of auditor, and the level of internationalization. Second, the country characteristics and the enforcement have always proved to be relevant when analysing the level of compliance with mandatory disclosure requirements, independently of the approach used. Third, some corporate governance characteristics (including the nature of the board members and the type of ownership/control) begin to emerge as determinants of the level of compliance with mandatory disclosure. Overall, whereas research on the determinants of compliance with mandatory disclosure requirements provides relevant insights, it does not yet provide a sufficient accumulation of empirical evidence. Based on this, we develop suggestions for future research, highlighting the importance of analysing the role of corporate governance on the level of compliance with mandatory disclosure requirements.

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Impact of the External Audit Quality and Corporate Governance on the Tunisian Company’ Financial Performance of Before and After the 2011 Revolution

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v9i3.14873 ◽

2019 ◽

Vol 9 (3) ◽

pp. 34

Author(s):

Nafti Olfa

Keyword(s):

Corporate Governance ◽

Financial Performance ◽

Audit Committee ◽

Audit Quality ◽

Good Governance ◽

Stock Exchange ◽

External Audit ◽

Before And After ◽

The Impact ◽

The Revolution

The latest financial scandals have challenged the accounting systems adopted and the quality of external audit and corporate governance.The purpose of the study is to analyze the impact of the determinants of the external audit quality and corporate governance on the Tunisian company’s financial performance before and after the 2011 revolution.Using a sample of 31 companies listed on the Tunis Stock Exchange this impact is tested for a period of eight years, divided into two periods. The first period spans from 2007 to 2010, before the revolution, and the second period spans from 2013 to 2016, after the revolution.The results show that after the revolution, a significant relationship exists between the financial performance of the companies and their size and indebtedness, whereas before the revolution, the relationship was significant between financial performance of the companies and the existence of an audit committee and managerial property. The behavior of Tunisian companies changed after the revolution and the 2011 revolution allowed the various parties who were against good governance to negatively affect investor confidence in auditors and the performance of the company. It's a crisis of the crisis.

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Impact of regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives in Kenya

Journal of Financial Regulation and Compliance ◽

10.1108/jfrc-04-2016-0036 ◽

2018 ◽

Vol 26 (2) ◽

pp. 246-270 ◽

Cited By ~ 2

Author(s):

David Mutua Mathuva ◽

H. Gin Chong

Keyword(s):

Institutional Theory ◽

Positive Association ◽

Mandatory Disclosure ◽

Content Type ◽

Disclosure Requirements ◽

Professional Body ◽

Analyse Data ◽

Required Disclosures ◽

The Impact ◽

Regulatory Reforms

Purpose This paper aims to utilize institutional theory to examine the impact of the 2008-2010 regulatory reforms on compliance with mandatory disclosures by savings and credit co-operatives (SACCOs) in Kenya. Design/methodology/approach Two-stage least squares panel regression approach is utilized to analyse data covering 1,272 firm-year observations for 212 SACCOs over a six-year period, 2008-2013. An analysis of the pre- and post-regulation impacts on compliance with mandatory disclosure requirements is also performed. Findings The results, which are in support of the institutional theory, reveal that licensed SACCOs engage in higher compliance with mandatory disclosures, and this improves from the pre- to the post-regulation period. The results show that SACCOs under inquiry engage in lower compliance with mandatory disclosure requirements, especially in the post-regulation period. The findings also reveal a significant and positive association between SACCO size, co-operative governance and compliance with mandatory disclosure requirements. Research limitations/implications The study focuses on transition-level SACCOs in a single country. An extension into other jurisdictions with nascent, transitional and mature SACCOs would provide greater insights into the impact of disclosure regulation. Further, the study uses a self-constructed disclosure checklist which is subject to coding errors and biases. Practical implications The findings highlight the need for SACCO regulators and accounting professional body to devise incentives to improve the level of compliance with required disclosures. Originality/value The study contributes to the dearth of evidence on the efficacy of the introduction of mandatory disclosure requirements in a developing country where compliance is problematic because of difficulties with enforcement.

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The impact of voluntary related-party disclosure in China over the years 2001–2005: a period of changing regulation

Corporate Ownership and Control ◽

10.22495/cocv7i4p4 ◽

2010 ◽

Vol 7 (4) ◽

pp. 50-61 ◽

Cited By ~ 1

Author(s):

Yuan George Shan ◽

David Round

Keyword(s):

Voluntary Disclosure ◽

Regulatory Environment ◽

Sensitive Area ◽

Mandatory Disclosure ◽

Corporate Disclosure ◽

Corporate Sector ◽

Disclosure Requirements ◽

Code Of Corporate Governance ◽

Regulatory Commission ◽

The Impact

Changes in the regulatory environment in China since 2002 with respect to related-party disclosure were a sign that China wished to make its corporate sector more transparent and accountable. It was expected that the introduction of mandatory disclosure might also lead to higher levels of voluntary disclosure than had previously been the case. Our investigation of a large sample of listed Chinese companies finds that a significant increase in the extent of related-party disclosure occurred after the introduction of The Code of Corporate Governance for Listed Companies in China (The Code). This suggests that The Code issued by the China Securities Regulatory Commission have worked as ‘soft’ corporate directives as well as insisting on legally enforceable mandatory disclosure requirements, to effectively improve the extent of corporate disclosure in the sensitive area of related-party transactions

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The Influence of Corporate Governance Structures on Compliance with Mandatory IFRSs Disclosure Requirements in the Jordanian Context

International Journal of Research in Business and Social Science (2147-4478) ◽

10.20525/ijrbs.v2i3.72 ◽

2013 ◽

Vol 2 (3) ◽

pp. 14-25 ◽

Cited By ~ 1

Author(s):

Marwa Hassaan

Keyword(s):

Corporate Governance ◽

Best Practices ◽

Cultural Values ◽

Financial Reporting ◽

Stock Exchange ◽

Fiscal Year ◽

Governance Structures ◽

Disclosure Requirements ◽

Amman Stock Exchange ◽

The Impact

This study examines the impact of corporate governance structures on the levels of compliance with mandatory IFRSs disclosure requirements by companies listed on the Amman Stock Exchange (ASE) as a leading Arab stock exchange. Using a disclosure index derived from mandatory IFRSs disclosure requirements for the fiscal year 2007, this study measures the levels of compliance by a sample of 75 non-financial companies listed on the ASE. This study extends the financial reporting literature and the emerging markets disclosure literature by being one of the first to investigate the influence of corporate governance requirements for best practices on the levels of compliance with mandatory IFRSs disclosure requirements by companies listed on the ASE. Results provide evidence of the lack of influence of corporate governance best practices on the levels of compliance with mandatory IFRSs disclosure requirements as it is not yet part of the cultural values within the Jordanian context. These findings are consistent with the notions of the theoretical foundation employed in this study.

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