Culture and financial reporting quality in GCC countries: what do we know about tribal culture?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saeed Rabea Baatwah ◽  
Khaled Salmen Aljaaidi ◽  
Ehsan Saleh Almoataz ◽  
Zalailah Salleh
Keyword(s):  
Financial Reporting ◽  
Boards Of Directors ◽  
Fixed Effects ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Sensitivity Analyses ◽  
Content Type ◽  
Reporting Practices ◽  
Tribal Culture ◽  
Gcc Countries

PurposeAlthough the effect of culture on financial reporting practices has been addressed in earlier studies, the existing empirical evidence totally neglects an important dimension in Gulf Cooperation Council (GCC) markets: tribal culture. The authors fill this gap in the literature using Oman as the setting.Design/methodology/approachThe authors collect data for 583 company-year observations for companies listed on the Omani capital market, 2007–2014. The authors run a two-way fixed effects panel data regression to test their hypothesis.FindingsTribal culture has a negative effect on financial reporting quality (FRQ), measured by both accrual-based and real earnings management. The findings are robust under a variety of sensitivity analyses. In additional analysis, the findings confirm that tribal culture negatively moderates the effectiveness of internal monitoring mechanisms and is associated with low-quality auditing. Further, the authors find tribal culture associated with delayed financial information.Originality/valueTo the authors' knowledge, the study makes several contributions to the literature because it is the first archival evidence linking tribal culture with FRQ. It is the first to show that the effect of corporate governance mechanisms on FRQ is moderated by tribal culture. The study has valuable implications for policymakers, regulators, boards of directors and auditors in GCC countries as well as in countries with similar cultures.

How to measure country-level financial reporting quality?

2016 ◽  
Vol 14 (2) ◽  
pp. 230-265 ◽  
Author(s):  
Qingliang Tang ◽  
Huifa Chen ◽  
Zhijun Lin
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Accounting Standard ◽  
Content Type ◽  
Reporting Practices ◽  
Financial Reporting Standards ◽  
Country Level ◽  
International Investors ◽  
International Convergence

Purpose The purpose of this study is to measure the financial reporting quality of 38 main countries (regions) in the world from 2000 to 2014. Design/methodology/approach This paper uses six accounting and auditing indicators to construct a comprehensive index for the measurement of country-level financial reporting quality. To test the validity of the methodology, the index to test institutional impacts on national financial reporting quality is used. Findings It was found that the results are consistent with the predictions and previous studies. The evidence suggests that the quality measure in this paper is innovative and appropriate and can provide a useful tool for researchers who are concerned with financial reporting quality at the country level. Originality/value The study is the first in the literature to use both accounting and auditing data to construct financial reporting quality indicators. The study should help international investors assess investment risks in foreign financial markets so as to make an informed decision. In addition, the diversity of financial reporting practices documented in the paper should prompt market regulators, accounting standard setters and professional accounting bodies to reinforce the efforts on international convergence of accounting and financial reporting standards and practices.

The effect of accounting methods on financial reporting quality

2018 ◽  
Vol 60 (6) ◽  
pp. 1401-1411
Author(s):  
Andrain Hadiyanto ◽  
Evita Puspitasari ◽  
Erlane K. Ghani
Keyword(s):  
Financial Reporting ◽  
Palm Oil ◽  
Reporting Quality ◽  
Fair Value ◽  
Financial Information ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Historical Cost ◽  
Fair Value Measurement ◽  
Value Measurement

Purpose This study aims to examine the relationship between accounting measurement method of biological asset and financial reporting quality. Specifically, this study examines whether using fair value method or the historical cost method on biological asset provides different financial reporting quality. Design/methodology/approach This study uses data from 38 agricultural companies that are members of the Roundtable on Sustainable Palm Oil. The annual reports of 38 companies from the Palm Oil Growers over a five-year period starting from 2011 to 2014 are analysed. Findings This study shows that companies using historical cost measurement produce less reliable and less relevant information compared to the companies that are using fair value measurement. Research limitations/implications The results in this study imply that the use of fair value measurement improves the quality of financial information. Practical implications This study supports IASB’s justification of developing IAS 41 as the principle-based standard that better represents the financial information related to biological asset and subsequently lead to good accountability and harmonisation practices. Originality/value This study provides evidence on the best measurement to be used in agriculture activities using a larger sample size of few countries. In addition, this study contributes to the existing literature on the effect of accounting methods on financial reporting quality.

The relationship between cost stickiness and financial reporting quality in Tehran Stock Exchange

2018 ◽  
Vol 67 (9) ◽  
pp. 1550-1565 ◽  
Author(s):  
Mahdi Salehi ◽  
Nasrin Ziba ◽  
Ali Daemi Gah
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Statistical Software ◽  
Testing Hypotheses ◽  
Content Type ◽  
The Relationship ◽  
Cost Stickiness

Purpose The purpose of this paper is to investigate the relationship between financial reporting and cost stickiness in companies listed on the Tehran Stock Exchange. Design/methodology/approach Data of all Iranian manufacturing listed companies gathered for testing hypotheses during 2010–2016 and R statistical software are employed in order to analyzing data. Findings The results of this study indicate that there is a significant relationship between administrative, sale, material, labor and overhead costs and the financial reporting qualities of the companies under study. Originality/value The study focuses on relationship between financial reporting and cost stickiness in companies listed on the Tehran Stock Exchange, which is the first study of its type in Iran.

International financial reporting standards and conservatism in the Association of Southeast Asian Nations countries

2018 ◽  
Vol 26 (4) ◽  
pp. 487-510 ◽  
Author(s):  
Marziana Madah Marzuki ◽  
Effiezal Aswadi Abdul Wahab
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Asymmetric Timeliness ◽  
Conditional Conservatism ◽  
Two Measures ◽  
Asean Countries ◽  
Laws And Regulations

Purpose The purpose of this paper is to investigate whether the convergence of IFRS in ASEAN countries resulted in an improvement in financial-reporting quality, and in particular with regards the degree of conditional conservatism of financial reporting. Then, the authors investigate whether the convergence to IFRS and the degree of conditional conservatism is influenced by corruption as a proxy for the strength of ASEAN jurisdiction legal and enforcement systems. Design/methodology/approach The sample of this study is based on 22,085 firm-year observations from three ASEAN countries, namely, Malaysia, Thailand and Singapore from 2008 to 2014. This study employs a panel least square regression to test the effect of IFRS on two measures of conservatism which are asymmetric timeliness and accrual-based loss recognition. The conservatism data are extracted from ORBIS, while data for corruptions are extracted from Corruption Perception Index (CPI) that was released by Transparency International. Findings This study finds Convergence of IFRS enhance conditional conservatism. The findings are robust for two measures of conservatism which are asymmetric timeliness and accrual-based loss recognition. The result on unconditional conservatism finds that IFRS reduce unconditional conservatism, which supports that the code-law structures of the ASEAN countries as characterized by unconditional conservatism is reduced after IFRS convergence. A further test indicates that corruption reduces conditional conservatism in more corrupt countries. Research limitations/implications This study focused on three ASEAN countries only, as they have consistent convergence dates to the IFRS. Therefore the result may not be generalized to other ASEAN countries. Practical implications The study provides implications to the regulators that IFRS enhance financial-reporting quality and reduce the randomness of decisions that are based on financial information as has been introduced by unconditional conservatism. Therefore it is important for the regulators to incorporate IFRS compliance into laws and regulations. Currently, IFRS compliance is not incorporated into laws and regulations for ASEAN countries, except for Malaysia. In Malaysia, Section 7 of the Financial Reporting Act 1997 (FRA) empowers the Malaysian Accounting Standards Board (MASB) to issue approved accounting standards for application in Malaysia. Under section 26D of the FRA, financial statements that are prepared or lodged with the Central Bank, Securities Commission or Registrar of Companies must comply with the standards issued by the MASB. Originality/value This paper extends the literature on the effect of IFRS on conservatism as it provides robust effect of IFRS on both conditional and unconditional conservatism. In addition, this study extends the literatures on the effect of corruptions in the relationship between IFRS and conditional conservatism.

Family ownership and financial reporting quality: Iranian evidence

2018 ◽  
Vol 8 (3) ◽  
pp. 339-356 ◽  
Author(s):  
Mahmoud Mousavi Shiri ◽  
Mahdi Salehi ◽  
Fatemeh Abbasi ◽  
Shayan Farhangdoust
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Stock Exchange ◽  
Accounting Information ◽  
Reporting Quality ◽  
Audit Fees ◽  
Financial Reporting Quality ◽  
Family Ownership ◽  
Content Type

PurposeIn the process of reporting accounting information, the auditor’s objective is to detect possible misstatements and errors in accounting information. Audit evidence aids auditors in providing reasonable assurance about the quality of financial reporting. Studying the quality of family firms’ financial reporting is of higher importance relative to non-family firms due to lower risk of accounting manipulation. Therefore, the purpose of this paper is to examine the relationship between family ownership structure and financial reporting quality from an auditing perspective.Design/methodology/approachTo analyze the research hypotheses, the authors use a sample data consisted of 221 companies listed on the Tehran Stock Exchange (including 52 family and 169 non-family firms) over a five-year span from 2011 to 2015.FindingsUsing multivariate regression analysis of panel data, our results indicate that audit risk in family firms is lower than their counterparts. Likewise, the findings are indicative of lower audit fees paid by family firms as compared to non-family ones. The authors also find that auditors put more effort in family firms and thus audit effort is more significant for these kinds of firms.Originality/valueThe study focuses on family ownership and financial reporting quality in a developing country like Iran and the results of the study may be beneficial to other developing nations, as Iran stock market possesses some unique features which are not normally prevailing in other equity markets, even in the Middle East.

Effects of leadership and accounting capacity on accountability through the quality of financial reporting by public organisations in Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yen Thi Tran ◽  
Nguyen Phong Nguyen ◽  
Trang Cam Hoang
Keyword(s):  
Public Sector ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Equation Modeling ◽  
Content Type ◽  
Research Results ◽  
Public Organisations ◽  
The Impact

Purpose By drawing on the institutional theory and contingency theory, this study aims to examine the effects of leadership and accounting capacity on the quality of financial reporting and accountability of public organisations in Vietnam. Furthermore, this paper is to determine the impact of financial reporting quality on accountability. Design/methodology/approach The research model and hypotheses have been tested by partial least squares structural equation modeling, with 177 survey samples obtained from accountants and managers working in the public sector in Vietnam. Findings The research results indicate that leadership and accounting capacity have a positive effect on financial reporting quality; leadership and accounting capacity positively influence accountability; and the quality of financial reporting has a positive impact on accountability. Research limitations/implications The research results provide empirical evidence of the direct impact of leadership and accounting capacity on financial reporting quality and accountability of public organisations in a developing country. Moreover, the current work also provides important evidence for the impact of financial reporting quality on accountability. Practical implications Public sector organisations must realise that leadership and accounting capacity play a vital role in the accounting reform process. Public institutions likewise need to pay attention to develop accounting capacity and promote leadership. Moreover, the results respond to the continuing call for increased citizen trust in public organisations. Originality/value To the best of the authors’ knowledge, this study is the first to examine the chain from leadership, accounting capacity, financial reporting quality and accountability in the context of public sector organisations in an Asian transition market.

Financial reporting quality, family ownership, and investment efficiency

2019 ◽  
Vol 45 (4) ◽  
pp. 513-535 ◽  
Author(s):  
Faisal Shahzad ◽  
Ijaz Ur Rehman ◽  
Sisira Colombage ◽  
Faisal Nawaz
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Emerging Market ◽  
Reporting Quality ◽  
Least Square ◽  
Financial Reporting Quality ◽  
Family Ownership ◽  
Investment Efficiency ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to empirically investigate the impact of two monitoring mechanisms: family ownership (FO) and financial reporting quality (FRQ) on investment efficiency (IE) over the period of 2007–2014 for listed firms on the Pakistan Stock Exchange. Design/methodology/approach The authors employ two-dimensional pooled OLS cluster at the firm and year level, two-stage least square regression and feasible generalized lease square regression regression methods. Findings The findings suggest that higher FRQ and FO are associated with higher IE. Further, the authors report that higher FRQ and FO mitigate over- and under-investment. The impact of FRQ on IE is stronger (weaker) for family-controlled businesses. The results for these particular estimates are robust for alternative estimation techniques and measures of FRQ and FO. Originality/value The study draws on both agency and behavioral agency theories and therefore contributes to the literature in the following ways. First, the authors examine a relationship between FRQ and IE. Second, the authors test the impact of FO on IE. Third, the authors test the moderating impact of FO on the relationship between FRQ and the IE of family and non-family firms in relatively less regulated emerging market.

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.

IFRS adoption, financial reporting quality and cost of capital: a life cycle perspective

2019 ◽  
Vol 31 (3) ◽  
pp. 497-522 ◽  
Author(s):  
Ahsan Habib ◽  
Md. Borhan Uddin Bhuiyan ◽  
Mostafa Monzur Hasan
Keyword(s):  
Life Cycle ◽  
Financial Reporting ◽  
Cost Of Capital ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Cost Of Equity ◽  
Content Type ◽  
Ifrs Adoption ◽  
Life Cycle Stages ◽  
The Impact

Purpose This paper aims to investigate the impact of International Financial Reporting Standards (IFRS) adoption on financial reporting quality and cost of equity. The paper further investigates whether such association varies at different life cycle stages. Design/methodology/approach This paper follows the methodologies of DeAngelo et al. (2006) and Dickinson (2011) to develop proxies for the firms’ stages in the life cycle. Findings Using both pre- and post-IFRS adoption period for Australian listed companies, the paper finds that financial reporting quality reduced and cost of equity increased because of the adoption of IFRS. The paper further evidences that financial reporting quality in the post-IFRS period increased cost of equity. Finally, the paper finds that mature firms produce a better quality of earnings, which result in lower cost of capital. The results indicate that a mature firm was benefited because of the adoption of IFRS. Originality/value The finding of this research is useful to the regulators and practitioners to understand the widespread benefit of IFRS adoption.

Integrated reporting, financial reporting quality and cost of debt

2020 ◽  
Vol 28 (3) ◽  
pp. 517-534 ◽  
Author(s):  
Mohammad Badrul Muttakin ◽  
Dessalegn Mihret ◽  
Tesfaye Taddese Lemma ◽  
Arifur Khan
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Cost Of Debt ◽  
Inverse Association ◽  
Integrated Reporting ◽  
Financial Reports ◽  
Content Type ◽  
Debt Market

Purpose Although proponents of integrated reporting (IR) advocate that this emerging practice has the potential to transform corporate reporting, the eventuation of this expectation would depend on the incentive IR provides to firms. This study aims to examine whether IR is associated with cost of debt and whether IR moderates the relationship between financial reporting quality and cost of debt. Design/methodology/approach Based on insights drawn from information asymmetry and agency theories, the authors develop models that link IR and financial reporting quality with a firm’s cost of debt. The authors analyze 847 firm-year observations drawn from non-financial firms traded on the Johannesburg Stock Exchange, for the period between 2009 and 2015. Findings The authors find that firms that provide integrated reports tend to have a lower cost of debt than those do not provide IR. The authors also find an inverse association between financial reporting quality and cost of debt, and that integrated reports accentuate this association. The findings suggest that the debt market perceives value in the information presented in integrated reports beyond what is furnished in financial reports. Originality/value To the best of the authors’ knowledge, this study is the first to document evidence suggesting that the debt market perceives value in the information presented in integrated reports, beyond what is furnished in financial reports.

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