Corporate governance and management incentives: evidence from the Scandinavian countries

2018 ◽  
Vol 18 (1) ◽  
pp. 1-13 ◽  
Author(s):  
Belle Selene Xia ◽  
Ignace De Beelde
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Empirical Work ◽  
Total Sample ◽  
Annual Reports ◽  
Future Research ◽  
Corporate Disclosure ◽  
Content Type ◽  
Leverage Ratio ◽  
Management Incentives

Purpose The Scandinavian boards are known for their “best practices” for corporate governance. This paper aims to examine the management incentives behind corporate disclosure via an empirical study. Design/methodology/approach Many of the previous empirical work have focused on the US data, but the generalizability of such findings is geographically bounded. The set of management incentives in this paper is examined using a total sample of 123 local annual reports via some of the largest publicly listed firms in the Scandinavian countries between the years 2008-2012. Findings The findings of this study reveal that a firm’s financial success originates from the different attributes of corporate governance. Correlation and regression analyses reveal that in terms of firm size, leverage ratio, the existence of audit committee and the independence of CEO, there is a correlation between firm-specific factors and the level of disclosure. In contrast to the previous literature, a positive relationship between corporate disclosure and information asymmetry was not found. Originality/value The results of this study are valuable to the policymakers when implementing regulations on corporate governance control. The strategic implications of the findings on business decisions and future research are also discussed.

Influence of internal audit reporting line and implementing internal audit recommendations on financial reporting quality

2019 ◽  
Vol 28 (1) ◽  
pp. 26-50 ◽  
Author(s):  
Abdulaziz Alzeban
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Negative Impact ◽  
Empirical Work ◽  
Internal Audit ◽  
Reporting Quality ◽  
Positive Influence ◽  
Financial Reporting Quality ◽  
Annual Reports ◽  
Content Type

Purpose This study aims to explore the influence of internal audit (IA) reporting lines and the implementation of IA recommendations (IMPLEMENT) on financial reporting quality (FRQ). Design/methodology/approach Data were obtained from the annual reports of 201 UK listed companies, and also from survey questionnaires completed by the chief audit executives working within those companies. Two measures are used as proxies of FRQ: abnormal accruals and accrual quality. Findings Findings indicate that when IA reports directly to the audit committee (AC), there is a significant positive influence upon FRQ. Conversely, when IA reports to the chief executive officer (CEO) or chief financial officer (CFO), there is a negative impact on FRQ. It is further shown by the results that lower income-increasing accruals are evident when there is greater IMPLEMENT, thereby showing an accompanying positive influence on FRQ. Moreover, the results indicate that greater adoption of such recommendations is also associated with internal reporting lines, i.e. when IA reports directly to the AC, FRQ results improved. Originality/value These findings contribute to the literature in the field of IA reporting, by introducing new insights regarding reporting lines and IMPLEMENT, and the influence of these on FRQ, and by establishing those insights through empirical work undertaken in the UK where little research on this issue has been reported.

Corporate governance and internal audit: an institutional theory perspective

2019 ◽  
Vol 20 (1) ◽  
pp. 175-190 ◽  
Author(s):  
Christina Vadasi ◽  
Michalis Bekiaris ◽  
Andreas Andrikopoulos
Keyword(s):  
Corporate Governance ◽  
Institutional Theory ◽  
Audit Committee ◽  
Internal Audit ◽  
Annual Reports ◽  
Substantial Impact ◽  
Content Type ◽  
Internal Auditors ◽  
The Impact ◽  
Audit Effectiveness

Purpose This paper aims to explore internal audit effectiveness through its contribution to corporate governance. Namely, the authors attempt to investigate the impact of internal audit professionalization on internal audit’s contribution to corporate governance. Design/methodology/approach Using a research framework informed by institutional theory, the authors predict that internal audit’s contribution to corporate governance is associated with factors related to internal audit professionalization. To investigate the arguments, the authors combine data from a survey of 49 listed companies in the Athens Stock Exchange with publicly available information from annual reports. Findings Empirical results indicate that internal audit professionalization affects internal audit effectiveness, as internal audit’s contribution to corporate governance is improved for organizations where internal audit function complies with internal auditing standards and internal auditors hold professional certifications. The findings also suggest that internal audit’s contribution to corporate governance is shaped by some company-specific characteristics, namely, CEO duality and audit committee quality. Practical implications The results have implications for internal auditors who wish to increase the efficiency of their work, corporate governance mechanisms such as the board of directors and the audit committee, which can use the findings of this study to better respond to their responsibilities concerning internal audit and regulators who can also benefit to strengthen areas with substantial impact on internal audit’s contribution to corporate governance. Originality/value This paper contributes to the academic discussion on the role of internal audit in corporate governance and complements the work of other researchers in the field of internal audit professionalization. This study tries to fill a gap in the literature on the effect of internal audit professionalization elements on internal audit’s contribution to corporate governance.

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 theoretical and econometric evaluation of corporate governance and capital structure in JSE-listed companies

2019 ◽  
Vol 19 (5) ◽  
pp. 1063-1081 ◽  
Author(s):  
Navitha Singh Sewpersadh
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Audit Committee ◽  
Firm Growth ◽  
Listed Companies ◽  
Annual Reports ◽  
Ceo Duality ◽  
Content Type ◽  
Governance Practices ◽  
Director Ownership

PurposeA vital resource for attracting investments and boosting economic growth is compliance with corporate-governance practices. To achieve firm growth, businesses often rely on leverage as a source of finance, which has tax-saving benefits but could attract financial distress costs. In this context, this study aims to examine the relationship between corporate governance and the use of debt financing in Johannesburg Stock Exchange (JSE)-listed companies.Design/methodology/approachThis study used a six-year period to examine 713 annual reports in an unbalanced panel of 130 JSE-listed companies from 2011 to 2016. The empirical econometric methodology used was the two-step difference generalised method of moments estimation model, which is robust in controlling endogeneity and potential bi-directional causality between leverage and corporate governance.FindingsThis study illustrated that corporate governance practices and firm-specific variables such as profitability, firm size and firm age have a significant influence on the capital structure decisions of JSE-listed firms. This study found support for four out of the six hypotheses. CEO duality and director ownership are positively correlated with leverage, whereas audit committee independence and board size are negatively correlated with leverage. This study also found contraventions of board independence, audit committee independence and CEO duality. The technology sector was the least compliant, with only 40 per cent of their boards being independent. The consumer-services sector had the maximum presence of CEO duality (7 per cent). The industrial sector had the highest average director ownership (18 per cent). The heath-care sector had 28 per cent of their audit committees in contravention of the independence rule.Practical implicationsA useful analysis of the theoretical frameworks used by academic writers are provided. This study revealed the governance practices contravened by the relevant sectors, as well as the associations between corporate governance and leverage.Originality/valueThe study contributes to the literature on capital structure and corporate governance by an emerging economy such as South Africa (SA) which has not been explored. This study’s results have key implications for policy-makers, practitioners, investors and regulatory authorities. This study informs these constituencies about a set of governance attributes that are catalysts and/or inhibitors of leverage.

Corporate governance and compliance with AAOIFI governance standards by Islamic banks

2020 ◽  
Vol 13 (5) ◽  
pp. 891-918
Author(s):  
Yosra Mnif ◽  
Marwa Tahari
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Audit Committee ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Disclosure Requirements ◽  
Financial Expertise ◽  
Islamic Financial Institutions ◽  
Research Stage

Purpose This study aims to examine the effect of the main corporate governance characteristics on compliance with accounting and auditing organisation for Islamic financial institutions’ (AAOIFI) governance standards’ (GSs) disclosure requirements by Islamic banks (IB) that adopt AAOIFIs’ standards in Bahrain, Qatar, Jordan, Oman, Syria, Sudan, Palestine and Yemen. Design/methodology/approach The sample consists of 486 bank-year observations from 2009 to 2017. Findings The findings reveal that compliance with AAOIFIs’ GSs’ disclosure requirements is positively influenced by the audit committee (AC) independence, AC’s accounting and financial expertise and industry expertise, auditor industry specialisation, IB’s size and IB’s listing status. On the other hand, it is negatively influenced by the ownership concentration. Research limitations/implications This study has only examined compliance with AAOIFI’s GSs’ disclosure requirements and has focussed on one major sector of the Islamic financial institutions (which is IB). Practical implications The findings are useful for various groups of preparers and users of IBs’ annual reports such as academics and researchers, accountants, management of IBs and some organisations. Originality/value While the study of the AAOIFIs’ standards has grown contemporary with considerable contributions from scholars, however, the majority of these studies are descriptive in nature. Indeed, the existing literature that has explored the determinants of compliance with AAOIFI’s standards is in the early research stage. To the best of the knowledge, there is a paucity of empirical research testing this issue.

scholarly journals Governance and ownership in Malaysia: their impacts on corporate performance

2020 ◽  
Vol 5 (2) ◽  
pp. 285-298
Author(s):  
Nazli Anum Mohd Ghazali
Keyword(s):  
Corporate Governance ◽  
Corporate Performance ◽  
Listed Companies ◽  
Developed Countries ◽  
Annual Reports ◽  
Future Research ◽  
Company Performance ◽  
Government Ownership ◽  
Board Size ◽  
Content Type

PurposeThe aim of this paper is to examine the relative influence of regulatory enhancements relating to corporate governance and attributes of business traits on performance of Malaysian listed companies.Design/methodology/approachRegression analysis was performed on all 742 non-financial main board companies listed on Bursa Malaysia using data from 2013 annual reports.FindingsThe results show that the number of board meetings held during the year, role separation and board size have a significant impact on corporate performance. By contrast, independent directors, government ownership and director ownership do not influence corporate performance.Research limitations/implicationsThe study investigated non-financial companies for the financial year 2013. Hence, the results may not apply to financial companies and other years. Future research can perhaps include all types of listed companies and carry out a longitudinal study to gain more comprehensive results and understanding on the relationship between corporate governance and corporate performance. Additionally, future research could also consider employing a different methodology to further unveil factors influencing corporate performance.Practical implicationsThe above findings provide new evidence of the effectiveness of the Malaysian Code on Corporate Governance in improving company performance. The significance of board meetings, role separation and board size shows the importance of internal governance in shaping company processes and hence performance.Originality/valueThe result suggests that although the Malaysian Code on Corporate Governance follows the corporate governance code of developed countries, the applicability of the recommendations to a developing country is evidenced. Companies in Malaysia are predominantly government-owned or closely held, but it appears that role separation matters even in these types of companies in achieving better performance.

Ownership structure and audit committee effectiveness: evidence from top GCC capitalized firms

2019 ◽  
Vol 12 (3) ◽  
pp. 407-425 ◽  
Author(s):  
Mahfoudh Abdulkarem Al-Musali ◽  
Mohammed Helmi Qeshta ◽  
Mohamed Ali Al-Attafi ◽  
Abood Mohammad Al-Ebel
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Ordinary Least Squares ◽  
Annual Reports ◽  
Least Squares Regression ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
The Relationship ◽  
Ownership Types

PurposeThe purpose of this study is to report on the level of audit committee (AC) effectiveness on the top capitalized firms in GCC countries and to empirically investigate the hypothesized influence of ownership types on the level of AC effectiveness.Design/methodology/approachThe empirical data were drawn from annual reports of 119 top listed firms in Gulf Co-operation Council (GCC) nations at the end of 2011. Ordinary least squares regression analysis was constructed to examine the relationships between ownership types and the level of AC effectiveness.FindingsThe findings revealed that family, government and institutional ownership, in addition to board independence, all have significant positive association with AC effectiveness, and they serve as a complement to AC effectiveness.Research limitations/implicationsThe findings of the study are important for policy makers and regulators as they could use them to understand the relationship between different corporate governance mechanisms and formulating best strategies that would help them to improve and adopt an optimal governance system constituted from interacting governance mechanisms.Originality/valueThis study is one of few that have examined the interaction between different corporate governance mechanisms. It provides insights about the relationship between AC effectiveness and other governance mechanisms in the GCC context.

Effect of corporate governance attributes on IFRS compliance: evidence from a developing country

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Martin Kabwe ◽  
Erastus Mwanaumo ◽  
Henry Chalu
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Negative Relationship ◽  
Listed Companies ◽  
Annual Reports ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
The Relationship

Purpose This study aims to analyze the relationship between corporate governance attributes and the International Financial Reporting Standard (IFRS) compliance among Zambian listed companies. Design/methodology/approach Data was collected through content analysis of annual reports and audited financial statements of 20 Zambian listed companies for the period 2012 to 2018. This is a longitudinal study which involved panel data analysis. A Hausman test was conducted to select the model to use to run the panel regression analysis. Findings The results indicate a positive statistically insignificant relationship between board size, board independence and IFRS compliance. A statistically significant negative relationship between audit committee independence and IFRS compliance. However, there is a positive relationship between board members with accounting and auditing experience, the inclusion of women on the board and IFRS compliance. Research limitations/implications Limitation includes the narrow focus on listed companies only which cannot be generalized to other public interest and private companies in Zambia. Practical implications The study findings imply that corporate governance attributes such as the inclusion of qualified and experienced Chartered Accountants and women on the board will increase IFRS compliance. The appointment criteria of non-executive directors should be strengthened. Originality/value This is the first empirical study to analyze the relationship between IFRS compliance and corporate governance in Zambia. The study also responds to the call by the World Bank (2017) to empirically study IFRS compliance in Zambia and contributes to the scant literature in developing countries on determinants of IFRS compliance.

Corporate governance and voluntary disclosure: evidence from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rupjyoti Saha ◽  
Kailash Chandra Kabra
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Negative Influence ◽  
Positive Influence ◽  
Annual Reports ◽  
Corporate Board ◽  
Content Type ◽  
Different Types ◽  
Significant Positive Influence

Purpose This study aims to examine the influence of some prominent corporate governance (CG) mechanisms such as board size (BS), board independence (BI), role duality (RD), board’s gender diversity (GD), ownership concentration (OC), audit committee independence (ACI), nomination and remuneration committee (NRC) and risk management committee (RMC) on voluntary disclosure (VD), as well as different types of VD after controlling the effect of some firm-specific factors for Indian firms. Design/methodology/approach The study selects market capitalization-based top 100 non-financial and non-utility firms listed on the Bombay Stock Exchange as on 31st March 2014. Data are drawn from the Capitaline Plus database over the period of 2014–2018. Appropriate panel data regression model is applied to examine the influence of CG on VD. Findings The study reveals a significant negative influence of BI on VD while GD and RMC exhibit a significant positive influence on the same. The remaining CG mechanisms such as BS, RD, OC, ACI and NRC appear to have no significant influence on VD. Analysis into the relationship between CG mechanisms and different types of VD reveals that BI, in particular, has a strong negative influence on corporate strategic disclosure (CSD) and forward looking disclosure (FWLD) while GD and RMC both exhibit a significant positive influence on CSD, FWLD, CG disclosure and financial and capital market disclosure. Notably, none of the CG mechanisms under consideration influence human and intellectual capital disclosure. Research limitations/implications The study considers annual reports as the only medium of making VD and ignores all other sources such as websites and press releases. Besides, it mainly emphasizes on corporate board structure, board committees and OC while other ownership structure-related variables family ownership, managerial ownership are not covered, which can be analysed in future studies. Practical implications The study offers some important theoretical, as well as practical connotations for regulators and practitioners operating in India, as well as other emerging economies having similar institutional settings. Originality/value The study is the first of its kind in India that examines the influence of various CG mechanisms on different types of VD and thereby contributes novel findings in the context of an emerging economy.

scholarly journals Corporate governance and the timeliness of audited financial statements

2019 ◽  
Vol 9 (4) ◽  
pp. 473-501
Author(s):  
David Mutua Mathuva ◽  
Venancio Tauringana ◽  
Fredrick J. Otieno Owino
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Annual Report ◽  
Financial Statements ◽  
Positive Influence ◽  
Annual Reports ◽  
Board Diversity ◽  
Content Type ◽  
Corporate Reporting ◽  
Financial Expertise

Purpose The nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. The purpose of this paper is to argue that the “quality” of CG in a firm has a significant association with the time it takes the audited annual report and financial statements to be released. Design/methodology/approach Using a set of 543 firm-year observations over the period 2007–2016, the authors examine whether a validated CG-Index is associated with audit report delay (ARD). The authors employ both granular as well as aggregated approaches to the analyses. In addition, the authors include control variables known to have an association with ARD in the panel data regressions. Findings The findings, which are robust for self-selection among other checks, reveal that financial expertise in the audit committee, board size, board meetings and independence in the board are associated with longer ARDs. Some CG attributes such as board diversity (i.e. women and different nationalities in the board) are associated with improved timeliness of the annual reports. The results also reveal that a longer tenure for independent directors in the board is associated with a shorter ARD. Overall, the authors find that the composite CG score has a positive influence on the timeliness of annual reports. Research limitations/implications The study focuses on listed companies in one developing country. Additional studies focusing on other jurisdictions could yield more results. Practical implications The study is useful in highlighting those CG characteristics firms should focus on toward the attainment of timely corporate reporting to aid in decision making by users. Originality/value The study is unique since it emphasizes the importance of focusing on an aggregate CG-Index, and the contribution of the CG-Index toward the timeliness of annual reports.

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