Choice of governance structure and earnings quality

2016 ◽  
Vol 29 (4) ◽  
pp. 372-390 ◽  
Author(s):  
Pamela Kent ◽  
Richard Anthony Kent ◽  
James Routledge ◽  
Jenny Stewart
Keyword(s):  
Cluster Analysis ◽  
Corporate Governance ◽  
Firm Size ◽  
Design Methodology ◽  
Best Practice ◽  
Earnings Quality ◽  
Governance Structure ◽  
Governance Mechanisms ◽  
Content Type

Purpose The purpose of this paper is to examine the effectiveness of voluntary governance mechanisms in Australia. Design/methodology/approach This study identifies similar choices of corporate governance by Australian firms and tests the effectiveness of the choices made based on the earnings quality of reported firms. Cluster analysis is conducted using governance best practice variables, firm size and an earnings quality variable. Findings This paper’s results support the voluntary governance approach for smaller firms, but suggest that mandatory governance requirements could be beneficial for larger firms. Evidence suggests that a benefit accrues for larger firms with the adoption of governance best practice. Cluster analysis indicates that larger firms tend to exhibit higher levels of adoption of governance best practice than smaller firms. Originality/value This paper adds to the literature by providing important information regarding the suitability of adoption of voluntary governance mechanisms in Australia.

scholarly journals Practitioner perspectives of multi-agency safeguarding hubs (MASH)

2019 ◽  
Vol 22 (1) ◽  
pp. 9-20
Author(s):  
Sarah Shorrock ◽  
Michelle M. McManus ◽  
Stuart Kirby
Keyword(s):  
Design Methodology ◽  
Best Practice ◽  
Governance Structure ◽  
Structured Interviews ◽  
Content Type ◽  
The North ◽  
Everyday Practices ◽  
Agency Practices ◽  
Practical Implications ◽  
Insight Into

Purpose The challenges of transferring the theoretical requirements of an effective multi-agency partnership into everyday practices are often overlooked, particularly within safeguarding practices. Therefore, the purpose of this paper is to explore practitioner perspectives of working within a multi-agency safeguarding hub (MASH) and those factors that encourage or hinder a multi-agency approach to safeguarding vulnerable individuals. Design/methodology/approach Semi-structured interviews with 23 practitioners from one MASH location in the North of England were conducted, with a thematic analysis being used to analyse findings. Findings The interviews with practitioners illustrated the complexity of establishing a multi-agency approach to safeguarding. It was inferred that whilst information sharing and trust between agencies had improved, the absence of a common governance structure, unified management system, formalisation of practices and procedures and shared pool of resources limited the degree to which MASH could be considered a multi-agency approach to safeguarding. Practical implications Establishing a multi-agency approach to safeguarding is complex and does not occur automatically. Rather, the transition to collaborative practices needs to be planned, with agreed practices and processes implemented from the beginning and reviewed regularly. Originality/value Few studies have investigated the implementation of MASH into safeguarding practices, with this paper providing a unique insight into practitioner opinions regarding the transition to multi-agency practices. Whilst there is a focus on MASH, the challenges to arise from the research may be reflective of other multi-agency partnerships, providing a foundation for best practice to emerge.

The association between disclosure of forward-looking information and corporate governance mechanisms

2014 ◽  
Vol 29 (7) ◽  
pp. 578-595 ◽  
Author(s):  
Basil Al-Najjar ◽  
Suzan Abed
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Annual Reports ◽  
Governance Mechanisms ◽  
Cross Sectional ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Computerized Content Analysis ◽  
Forward Looking

Purpose – This paper aims to witness the importance of corporate governance mechanisms and investigates the relationship between the quality of disclosure of forward-looking information in the narrative sections of annual reports and the governance mechanisms for non-financial UK companies. Design/methodology/approach – Computerized content analysis using QSR NVivo 8 is used to measure the extent of forward-looking information in the narratives of the annual reports for 238 companies listed in the London Stock Exchange. Cross-sectional regression analysis is used to examine the impact of the corporate governance mechanisms on forward-looking information. Findings – The results show that board size and the independence of the audit committee are associated with the level of voluntary disclosure of forward-looking information. Research limitations/implication – One limitation of this study is that in controls for the effect of the financial crisis period, by selecting a representative year for a five-year period, 2006. The authors argument in using this year is based on the fact that the main variables of interest do not vary significantly with time, the cross-sectional analysis of the selected period will provide a fair view of the last five year-period. Practical implications – The authors report the importance of some governance practices in the UK, such as the role of the board members as well as the importance of audit committee independence. Originality/value – This paper contributes to the literature by using computerized content analysis to examine the relation between corporate governance mechanism and disclosure quality of forward-looking information using sample of companies before financial crisis period. The authors also examine governance mechanisms that are under-researched in the field of forward-looking disclosure.

A qualitative investigation of benchmarking barriers in Nigeria

2016 ◽  
Vol 23 (7) ◽  
pp. 1677-1696 ◽  
Author(s):  
Yewande Adetoro Adewunmi ◽  
Hikmot Koleoso ◽  
Modupe Omirin
Keyword(s):  
Design Methodology ◽  
Best Practice ◽  
Computer Software ◽  
Facilities Management ◽  
Structured Interviews ◽  
Quality Of Data ◽  
Content Type ◽  
Port Harcourt ◽  
Practical Implications

Purpose The purpose of this paper is to examine benchmarking barriers among Nigerian facilities management (FM) practitioners. Design/methodology/approach Data collection were through semi-structured interviews with 34 FM heads from three selected cities in Nigeria. Out of this number, 16 were from Lagos, ten from Abuja while eight managers were from Port Harcourt, respectively. These managers were selected using purposive sampling based on their experience in the field of FM across the various sectors of the economy. The interviews were analysed with Nvivo 10 software qualitative computer software. Findings Those that do informal benchmarking face challenges with data, employees lack of confidence in new initiatives and poor support of senior management, the companies that use best practice benchmarking face constraints of access to information and employees unwillingness to change and comply to company set standards, unwillingness of benchmarking partners to understand the usefulness of the project, and problems that emanate from the quality of data obtained. Practical implications The results therefore suggest that to improve the practice of best practice benchmarking there is need to improve both quantity and quality of data for the exercise and enhance standard practice. Originality/value The study established a new category of benchmarking barriers called the market category of benchmarking barriers and further distinguished benchmarking barriers based on two forms of benchmarking which is informal and formal benchmarking. Also there are limited studies on benchmarking barriers in developing countries.

The impact of corporate governance and ownership structure reforms on earnings quality in China

2015 ◽  
Vol 23 (2) ◽  
pp. 169-198 ◽  
Author(s):  
Xu_Dong Ji ◽  
Kamran Ahmed ◽  
Wei Lu
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Earnings Quality ◽  
Future Research ◽  
Governance Mechanisms ◽  
Content Type ◽  
Listed Firms ◽  
Ownership Structures ◽  
Corporate Governance Mechanisms ◽  
The Impact

Purpose – The purpose of this paper is to investigate the effect of corporate governance and ownership structures on earnings quality in China both prior and subsequent to two important corporate reforms: the code of corporate governance (CCG) in 2002 and the split share structure reform (SSR) in 2005. Design/methodology/approach – This study utilises informativeness of earnings (earnings response coefficient), conditional accounting conservatism and managerial discretionary accruals to assess earnings quality using 12,267 firm-year observations over 11 years from 2000 to 2010. Further, two dummy variables for measuring the changes of CCG and SSR are employed to estimate the effects of CCG and SSR reforms on earnings quality via OLS regression. Findings – This study finds that the promulgation of the CCG in 2002 has had a positive impact, but the SSR reform in 2005 has had little effect on listed firms’ earnings quality in China. These results hold good after controlling for a number of ownership, governance and other variables and estimating models with multiple measures of earnings’ quality. Research limitations/implications – Future research could focus on how western style corporate governance mechanisms have been constrained by the old management systems and governmental dominated ownership structures in Chinese listed firms. The conclusion is that simply coping Western corporate governance model is not suitable for every country. Practical implications – The results will assist Chinese regulators in improving reporting quality, ownership structure and governance mechanisms in China. The results will help international investors better understand quality of financial information in China. Originality/value – This is the first to our knowledge that addresses the effects of major governance and ownership reforms together on accounting earnings quality and, thus, makes a significant contribution on understanding the effect of regulatory reforms on improving earnings quality. In doing so, it also indirectly assesses the effectiveness of western-style corporate governance mechanisms introduced in China.

Audit committee versus other governance mechanisms and the effect of investment opportunities: evidence from Palestine

2020 ◽  
Vol 20 (3) ◽  
pp. 527-544 ◽  
Author(s):  
Islam Abdeljawad ◽  
Ghassan A.I. Oweidat ◽  
Norman Mohd Saleh
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Valuable Insight ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Investment Opportunities ◽  
The Relationship

Purpose This paper aims to explore how the presence of an audit committee is associated with other corporate governance mechanisms, i.e. board structure, ownership structure and quality of external audit. The present study evaluated whether the presence of the audit committee complements or substitutes other governance mechanisms in Palestinian companies. Moreover, the effect of investment opportunities on the relationship between the formation of the audit committee and the quality of the auditor was addressed. Design/methodology/approach The association between the formation of the audit committee and other governance variables was modelled as a binary logistic model. The sample comprising 44 firms listed on Palestine exchange for the period between 2013 and 2017, amounting to 220 firm-year observations. Findings Based on the investigation, the results have indicated that board independence, the distinction between the chairman and chief executive officer function, ownership concentration and audit quality enhance the chance of audit committee formation, implying complementary effect. Contrastingly, board size and board ownership serve as a substitute to audit committee formation. It has also been found that investment opportunities act as an effective moderating factor that strengthens the relationship between audit quality and the formation of the audit committee. Originality/value The study provides valuable insight into the interaction between multiple corporate governance mechanisms within the economy of Palestine where the external uncertainty is high and investment opportunities are constrained by the decisions of the occupying authority. The findings may help regulators and policymakers in Palestine alongside those of other countries with similar environmental features to revise and update their corporate governance codes to ensure that the best control can be achieved, subsequently attracting more foreign and domestic investments.

Corporate governance and failure risk: evidence from Estonian SME population

2019 ◽  
Vol 42 (6) ◽  
pp. 703-720 ◽  
Author(s):  
Virgo Süsi ◽  
Oliver Lukason
Keyword(s):  
Corporate Governance ◽  
Logistic Regression ◽  
Firm Size ◽  
Design Methodology ◽  
Population Level ◽  
Ownership Concentration ◽  
Managerial Ownership ◽  
Content Type ◽  
Failure Risk ◽  
Definition Of

Purpose The purpose of this study is to find out how corporate governance is interconnected with failure risk in case of small- and medium-sized enterprises (SMEs). Design/methodology/approach The study is based on Estonian whole population of SMEs, in total 67,058 observations, and data are obtained from Estonian Business Register. Failure risk (FR) is portrayed with a well-known Altman et al. (2017) model, while seven variables reflecting corporate governance (CG) based on previous studies have been selected. As the method, logistic regression (LR) is applied with FR in the binary form as a dependent variable and seven CG variables as independent. The effect of firm size and age is studied with two separate LR models. Findings The results indicate that with the growth in manager’s age and the presence of managerial ownership, failure risk reduces. In turn, the presence of larger boards and managers having directorships in other firms leads to higher failure risk. Gender heterogeneity in the board, board tenure length and ownership concentration by means of having a majority owner are not associated with failure risk. The obtained results vary with firm size and age. Originality/value Unlike this study, research published on this topic earlier has used a much narrower definition of failure, mostly focused on large and listed companies, been sample based and information about corporate governance variables has often been obtained through questionnaires. All these limitations are relaxed in this population level study.

scholarly journals Political connections and earnings quality

2016 ◽  
Vol 24 (4) ◽  
pp. 339-356 ◽  
Author(s):  
Iman Harymawan ◽  
John Nowland
Keyword(s):  
Design Methodology ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Political Stability ◽  
Political Connections ◽  
Content Type ◽  
Government Effectiveness ◽  
Different Dimensions ◽  
Market Pressures

Purpose The purpose of this study is to investigate how the earnings quality of politically connected firms is affected by changes in political stability and government effectiveness in a developing country. Design/methodology/approach This study uses a sample of 2,073 firm-year observations from 349 firms listed on the Indonesian Stock Exchange from 2003 to 2012 to examine how political stability and government effectiveness affect the earnings quality of politically connected firms, relative to non-politically connected firms. A two-stage model is used to address self-selection issues in the choice of firms to establish political connections. Findings This study finds that increased government effectiveness reduces the benefits of political connections, requiring politically connected firms to be more responsive to market pressures and resulting in higher earnings quality. However, increased political stability enhances the certainty of benefits from political connections, reducing the need for politically connected firms to respond to market pressures and resulting in lower earnings quality. Research limitations/implications For policymakers, these results indicate that different dimensions of political and economic development can affect the incentives of firms with political connections in different ways. Originality/value This study finds that the earnings quality of politically connected firms increases as government effectiveness improves, but it decreases as the political environment becomes more stable.

Did Japanese-SOX have an impact on earnings management and earnings quality?

2015 ◽  
Vol 30 (4/5) ◽  
pp. 482-510 ◽  
Author(s):  
Masumi Nakashima ◽  
David A. Ziebart
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Reporting System ◽  
Earnings Quality ◽  
Business Environment ◽  
Real Earnings Management ◽  
Material Weakness ◽  
Content Type ◽  
Accruals Management

Purpose – The purpose of this paper is to investigate whether Japanese Sarbanes – Oxley Act (J-SOX) impacted earnings management and earnings quality of public firms in Japan. Design/methodology/approach – This archival study compares earnings management and earnings quality of firms that disclose at least one material weakness with a sample matched on size and industry without a material weakness. Findings – The authors investigate whether the differences in regulations, corporate governance and regulatory environment acceptance influence earnings management and earnings management of Japanese listed firms, relative to findings in the USA. They found the Japanese results to be slightly different from the results found in previous USA studies. First, the time-series observations suggest that while accruals management and real earnings management remained unchanged for control firms, accruals management and real earnings management increased for material weaknesses disclosing firms following J-SOX. The regression analyses suggest that accruals management for both the groups is significant in the pre-and post-J-SOX periods, but that real earnings management declined for both the groups post-J-SOX. Second, while, both accruals quality and accuracy of cash flow predictions improved in the post-J-SOX period. Research limitations/implications – The sample of Japanese firms disclosing a material weakness is small because the number of firms that disclose internal control deficiencies is decreasing in Japan. The authors have no evidence that their results are not generalizable to a larger sample and leave this for future research. Practical implications – The authors provide evidence that J-SOX, which does not have a direct reporting system, does not constrain earnings management. Their results drive the regulator to reconsider whether the reporting system works in the Japanese business environment. Additionally, their results show that J-SOX has no effect on earnings management; thus, regulators need to reconsider the governance function of directors and internal auditors. This paper communicates to the world how J-SOX works in Japan through changes in earnings quality and management post J-SOX and the root problems. Originality/value – This paper is the first (of which the authors are aware) to examine whether J-SOX impacted both earnings management and earnings quality in Japan. This paper discusses how the differences in regulations and corporate governance as well as the differences between USA-SOX and J-SOX may explain the results observed in Japan. This paper provides results regarding whether J-SOX improved earnings quality.

scholarly journals Does D&O insurance matter for stock price crash risk? Evidence from an Asian emerging market

2019 ◽  
Vol 3 (1) ◽  
pp. 34-46
Author(s):  
Ming-Te Lee ◽  
Kai-Ting Nien
Keyword(s):  
Corporate Governance ◽  
Stock Price ◽  
Emerging Market ◽  
Insurance Coverage ◽  
Crash Risk ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
The Relationship

Purpose The purpose of this paper is to address the opposing views of the relationship between directors’ and officers’ liability insurance (D&O insurance) and stock price crash risk in a major Asian emerging stock market. Design/methodology/approach This paper finds an endogenous relationship between D&O insurance and stock price crash risk. Hence, the two-stage least squares regression analysis is used to address the endogeneity issue when the relationship is examined. Moreover, this paper further controls the quality of other corporate governance mechanisms to investigate whether D&O insurance still has an effect on stock price crash risk. Findings The effect of D&O insurance coverage is significantly negatively related to firm-specific stock price crash risk in Taiwan. More importantly, even when the quality of other corporate governance mechanisms is controlled, the negative relationship between D&O insurance coverage and firm-specific stock price crash risk remains significant. The evidence supports that D&O insurance serves as an effective external monitoring mechanism, strengthens corporate governance, and thus reduces stock price crash risk. Originality/value Emerging Asian markets suffer a dearth of research on the relationship of D&O insurance coverage and the firm-specific stock price crash risk. Investigating the relationship in Taiwan, the present study fills the research void. The findings show that D&O insurance plays an important role in reducing stock price crash risk of Taiwanese firms even when other corporate governance mechanisms are in place.

Factors influencing quality corporate governance in Sub Saharan Africa: an empirical study

2014 ◽  
Vol 14 (4) ◽  
pp. 555-574 ◽  
Author(s):  
Nelson Waweru
Keyword(s):  
Corporate Governance ◽  
Firm Size ◽  
Audit Quality ◽  
Developing Economies ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Factors Influencing ◽  
Investment Opportunities ◽  
Sub Saharan

Purpose – This study aims to examine the factors influencing the quality of corporate governance in South Africa (SA). Firm-level variables including performance, firm size, leverage, investment opportunities and audit quality were identified from the corporate governance literature. Design/methodology/approach – The study used ordinary least squares regression on firm-specific and corporate governance variables obtained from panel data of 247-firm years obtained from the annual reports of the 50 largest companies listed on the Johannesburg Stock Exchange (JSE) Securities Exchange of SA. Findings – This study found leverage, firm size and investment opportunities as the main factors influencing the quality of corporate governance in SA. Research limitations/implications – The research findings should be interpreted in the light of the following limitations. First, the study sample consists of the 50 largest firms listed in the JSE of SA. Because these are large companies, the results may not be generalized to other smaller firms operating in SA. Second, this study is constrained to SA. Firms in other developing countries may differ from their SA counterparts. Originality/value – The results of this study are important to the King Committee and other corporate governance regulators in Sub-Saharan Africa, in their effort to improve corporate governance practices and probably minimize corporate failure and protect the well-being of the minority shareholders. Furthermore, the study contributes to our understanding of the variables affecting the quality of corporate governance in developing economies of Africa.

Sign in / Sign up

Export Citation Format

Share Document