scholarly journals Use of Big Four auditors and fund raising: evidence from developing and emerging markets

2018 ◽  
Vol 13 (2) ◽  
pp. 371-390
Author(s):  
Leif Atle Beisland ◽  
Roy Mersland ◽  
Øystein Strøm
Keyword(s):  
Emerging Markets ◽  
Audit Quality ◽  
Emerging Countries ◽  
Data Set ◽  
Content Type ◽  
Auditor Choice ◽  
For Profit ◽  
Debt Capital ◽  
The Relationship ◽  
Big Four

Purpose This study is motivated by recent research suggesting that the funding benefits of using Big Four auditors may not be as uniform as were previously assumed. The purpose of this paper is to analyze the relationship between use of Big Four auditors and access to debt capital by applying data from microfinance institutions (MFIs) in emerging countries, a population typically not investigated in accounting research. Design/methodology/approach The authors apply a unique hand-collected data set from 60 emerging markets and empirically investigate whether access to various debt categories is related to the use of Big Four auditors. Findings The authors find that access to international commercial debt, international subsidized debt and government agency debt is positively related to the use of a Big Four auditor. For local commercial debt, the authors find no association between auditor type and access to debt capital. The association between auditor choice and access to debt capital is stronger for nonprofit than for-profit MFIs. Originality/value This is the first audit quality study to include a broad sample of emerging countries, which in itself is an important contribution. As far as general audit quality research is concerned, the authors take the literature one step further by showing that the benefits of using a Big Four auditor may be dependent on the specific source of debt financing a firm or organization seeks to use. Moreover, the authors demonstrate that the for-profit vs nonprofit dimension influences the relationship between auditor choice and access to capital.

Corporate political connections, agency costs and audit quality

2016 ◽  
Vol 24 (4) ◽  
pp. 357-374 ◽  
Author(s):  
Arifur Khan ◽  
Dessalegn Getie Mihret ◽  
Mohammad Badrul Muttakin
Keyword(s):  
Agency Costs ◽  
Audit Quality ◽  
Agency Cost ◽  
Political Connections ◽  
Political Connection ◽  
Data Set ◽  
Research Attention ◽  
Content Type ◽  
Big 4 ◽  
The Relationship

Purpose The effect of political connections of agency costs has attracted considerable research attention due to the increasing recognition of the fact that political connection influences corporate decisions and outcomes. This paper aims to explore the association between corporate political connections and agency cost and examine whether audit quality moderates this association. Design/methodology/approach A data set of Bangladeshi listed non-financial companies is used. A usable sample of 968 firm-year observations was drawn for the period from 2005 to 2013. Asset utilisation ratio, the interaction of Tobin’s Q and free cash flow and expense ratio are used as alternative proxies for agency costs; membership to Big 4 audit firms or local associates of Big 4 firms is used as a proxy for audit quality. Findings Results show that politically connected firms exhibit higher agency costs than their unconnected counterparts, and audit quality moderates the relationship between political connection and agency costs. The results of this paper suggest the importance of audit quality to mitigate agency problem in an emerging economic setting. Research limitations/implications The findings of this paper could be of interest to regulators wishing to focus regulatory effort on significant issues influencing stock market efficiency. The findings could also inform auditors in directing audit effort through a more complete assessment of risk and determining reasonable levels of audit fees. Finally, results could inform financial statement users to direct investments to firms with lower agency costs. Originality/value To the knowledge of the authors, this study is one of the first to explore the relationship between political connection and agency costs, and the moderating effect of audit quality of this relationship.

Effects of ownership structure on the relationship between multinationality and downside risk

2019 ◽  
Vol 26 (3) ◽  
pp. 401-421
Author(s):  
Chao Zhou
Keyword(s):  
Emerging Markets ◽  
Real Options ◽  
Ownership Structure ◽  
Emerging Market ◽  
Downside Risk ◽  
Publicly Traded ◽  
Data Set ◽  
Content Type ◽  
Real Options Theory ◽  
The Relationship

Purpose The purpose of this paper is to explore how multinationality affects multinational companies’ (MNCs) downside risk and the moderate effects of ownership structure in the setting of emerging markets based on Chinese publicly traded manufacturing MNCs. Design/methodology/approach The author derives hypotheses based on real options theory and agency theory, and tests hypotheses by using Tobit model and a unique data set of Chinese A-shared publicly traded manufacturing MNCs in the period of 2010–2016. Findings The empirical results suggest that multinationality is positively related to downside risk and this effect is subjected to ownership structure for firms in emerging markets. In particular, multinationality of MNCs with a high level of ownership concentration, managerial ownership and institutional ownership is more likely to reduce downside risk. Practical implications The main conclusion of this paper highlights the importance of ownership structure of MNCs in explaining the real options value of multinationality, and conveys to owners of MNCs in China and other emerging markets the need to strengthen firms’ governance if they want to maximize the benefits of multinational operations. Originality/value This study extends existing studies by taking ownership structure into consideration and highlighting the importance of agency problem in the examination of multinationality and downside risk, which provides a potential explanation for previous mixed evidence. This study also provides new evidence for the relationship between multinationality and downside risk by using a unique sample from China, an emerging market country.

Earnings management and ownership structure in emerging market

2017 ◽  
Vol 43 (10) ◽  
pp. 1117-1136 ◽  
Author(s):  
Naima Lassoued ◽  
Mouna Ben Rejeb Attia ◽  
Houda Sassi
Keyword(s):  
Emerging Markets ◽  
Earnings Management ◽  
Ownership Structure ◽  
Audit Quality ◽  
Emerging Market ◽  
Middle Eastern ◽  
Convincing Evidence ◽  
Loan Loss ◽  
African Countries ◽  
Content Type

Purpose The purpose of this paper is to investigate whether ownership structure affects earnings management in the banking industry of emerging markets. Design/methodology/approach The empirical study is conducted using a sample of 134 banks from 12 Middle Eastern and North African countries. Econometrically speaking, the study used a panel data regression analysis. Findings The authors found convincing evidence that banks with more concentrated ownership use discretionary loan loss provisions to manage their earnings. The authors also found that state and institutional owners encourage earnings management, while family owners reduce this practice. Practical implications The findings would be valuable for investors since they should take into account ownership structure in order to reach a better investment decision. Moreover, regulatory reforms in emerging markets should push for more transparency about ownership structure, high levels of supervision, and external audit quality. Originality/value This study presents international evidence on the prominent role of owners in earnings management in emerging markets with weak shareholder rights protection.

Customer satisfaction, value for money and repurchase intent in the context of system delivery projects: a longitudinal study

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Matti Haverila ◽  
Jenny Carita Twyford
Keyword(s):  
Project Management ◽  
Customer Satisfaction ◽  
Effect Sizes ◽  
Relational Exchange ◽  
Value For Money ◽  
Data Set ◽  
Content Type ◽  
Repurchase Intent ◽  
The Relationship ◽  
Relational Exchange Theory

PurposeDrawing upon the relational exchange theory, the longitudinal relationship between various stages of project management customer satisfaction, value for money and repurchase intent are examined.Design/methodology/approachUsing a survey questionnaire, data were gathered over four consecutive quarters (N = 2,537). The statistical methods included exploratory factor analysis, confirmatory composite analysis (CCA) and partial least squares structural equation modeling (PLS-SEM).FindingsProject management was perceived as a three-dimensional construct (proposal, installation, commissioning/start-up). There was a significant longitudinal relationship between project stages and satisfaction in the complete data set. The results varied on the quarterly basis. The relationship customer satisfaction/repurchase intent was significant in the whole data set and during all quarters. This was the case for the relationships between value for money and customer satisfaction and between value for money and repurchase intent. The effect sizes were small between project management stages and customer satisfaction, small to medium for the value for money construct and large for the customer satisfaction construct.Originality/valueAn important implication is the significant relationship between the stages of project management and satisfaction. However, the effect sizes were small, however. The importance of the effect size in comparison to the significance of the relationships is highlighted especially when the sample size is large. The paper also confirms the linear relationship between satisfaction and repurchase intent. The nature of the relationship between customer satisfaction and loyalty is based on a moderate exchange relationship in the relational exchange continuum. The study contributes to the relational exchange theory in the context of project management.

The impact of organizational position level and cultural flow direction on the relationship between cultural intelligence and expatriate cross-border adaptation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ying Zhang ◽  
Yuran Li ◽  
Mark Frost ◽  
Shiyu Rong ◽  
Rong Jiang ◽  
...  
Keyword(s):  
Cultural Intelligence ◽  
Flow Direction ◽  
Power Distance ◽  
Cultural Adjustment ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
Organizational Position ◽  
The Impact ◽  
The Relationship

PurposeThis paper aims to examine the critical role played by cultural flow in fostering successful expatriate cross-border transitions.Design/methodology/approachThe authors develop and test a model on the interplay among cultural intelligence, organizational position level, cultural flow direction and expatriate adaptation, using a data set of 387 expatriate on cross-border transitions along the Belt & Road area.FindingsThe authors find that both organizational position level and cultural flow moderate the relationship between cultural intelligence and expatriate adaptation, whereby the relationship is contingent on the interaction of organizational position status and assignment directions between high power distance and low power distance host environments.Originality/valuePrevious research has shown that higher levels of cultural intelligence are positively related to better expatriate adaptation. However, there is a lack of research on the effect of position difference and cultural flow on such relationship. Our study is among the first to examine how the interaction between cultural flow and organizational position level influences the cultural intelligence (CI) and cultural adjustment relationship in cross-cultural transitions.

Towards a framework for measuring creative economy: evidence from Balkan countries

2019 ◽  
Vol 23 (1) ◽  
pp. 41-62 ◽  
Author(s):  
Valentina Ndou ◽  
Giovanni Schiuma ◽  
Giuseppina Passiante
Keyword(s):  
Business Environment ◽  
Creative Economy ◽  
Data Set ◽  
Content Type ◽  
Balkan Countries ◽  
World Economic ◽  
And Performance ◽  
Diverse Data ◽  
The Relationship ◽  
Performance Dimension

PurposeThe creative process through which the territorial resources, knowledge and culture are used, exploited and configured to match needs and to achieve congruence with the changing business environment has become a crucial process for competitiveness. This is even more relevant for economies of developing countries which are continuously struggling to reap the benefits of globalisation, as well as to grasp the new opportunities for competitiveness. As such, this paper aims to try to concentrate on the dynamic perspectives of the creative economy of countries by distinguishing between the potentialities and performance. The paper tackles the influence that creativity capacities might have on performance of countries.Design/methodology/approachThe methodology consists in identifying creative economy indicators from a diverse data set of the World Economic Forum and distinguish them between potential and performance indicators.FindingsData reveal as good progress and emphasis is being devoted to increasing the level of creativity; however, the Balkan countries still holdup in their capacity to boost innovation.Practical implicationsThe paper provide a new focus of research on creativity measurement that is significant for understanding what creative capacities territories possess and the ability to make proficient use for growth and innovation.Originality/valueThis paper proposes a new operational framework for measuring and interpreting the creative economy indicators by identifying not only indicators that gauge the potentialities of a country, but also indicators that are linked with the performance dimension, as well as the relationship amongst them.

Institutional effect on born global firms in China: the role of Sun Tzu’s The Art of War strategies

2016 ◽  
Vol 10 (1) ◽  
pp. 1-19 ◽  
Author(s):  
Man Zhang ◽  
Qian Gao ◽  
Jane V. Wheeler ◽  
Jungsook Kwon
Keyword(s):  
Emerging Markets ◽  
Institutional Environment ◽  
Critical Role ◽  
Born Global ◽  
Internationalization Process ◽  
Content Type ◽  
International Performance ◽  
The Relationship ◽  
Born Global Firms

Purpose – This paper aims to investigate the role of Sun Tzu’s significant strategies on the relationship between the institutional environment and international performance of Chinese born global firms, a type of small- and medium-sized enterprise (SME) characterized by the company’s limited resources and its early efforts to internationalize. Design/methodology/approach – The methodology is based on a multi-case analysis of interviews conducted with four chosen born global firms, coupled with public database and Web site searches. Through the use of qualitative methods, propositions were developed. Findings – This paper provides insights regarding how the institutional environment, both formal and informal, has a strong positive relationship with born global firm’s international performance. Moreover, Sun Tzu’s significant strategies play a critical role in the internationalization process of born global firms in emerging markets. Originality/value – Although existing studies discuss the application of Eastern philosophical strategies adopted by firms in emerging markets, to the best of our knowledge, this is one of the earliest studies which evaluates the moderation effect of Sun Tzu’s significant strategies on the relationship between institutional environment and business performance. The paper contributes to scholarly discourse on the influencing factors of born global firm’s internationalization process. It also has practical relevance to international entrepreneurs and SMEs from emerging markets.

Targeted state economic development incentives and entrepreneurship

2018 ◽  
Vol 7 (3) ◽  
pp. 235-247 ◽  
Author(s):  
Meg Patrick Tuszynski ◽  
Dean Stansel
Keyword(s):  
Economic Development ◽  
Economic Freedom ◽  
Entrepreneurial Activity ◽  
Data Set ◽  
Content Type ◽  
Incentive Programs ◽  
Economic Development Incentives ◽  
State Economic Development ◽  
Development Incentives ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between state economic development incentives programs and entrepreneurial activity. Design/methodology/approach The authors use panel data and a fixed-effects model to examine the determinants of five measures of entrepreneurial activity. To measure state economic development incentives programs, they use a new and substantially improved data set from Bartik (2017). They also include a measure for economic freedom, the Fraser Institute’s Economic Freedom of North America index. Findings The authors find a robustly negative relationship between development incentives and patent activity. They find some evidence that incentives are negatively associated with small business establishments (<10 employees) as a percentage of total establishments but positively associated with the large business establishment (>500 employees) share. They also find evidence of a positive relationship between economic freedom and both patent activity and net business formation. Research limitations/implications The results imply that economic development incentive programs are unlikely to increase entrepreneurial activity and may decrease it. They also imply increased economic freedom (lower taxes, lower spending, and lower governmental restrictions on labor markets) may increase entrepreneurial activity. Originality/value To the authors’ knowledge, this paper provides the first examination of the relationship between development incentives and entrepreneurial activity that utilizes Bartik (2017), a new vastly improved data set of state economic development incentive programs. The paper also contributes to the literature on the relationship between economic freedom and entrepreneurial activity.

Does intellectual capital impact firms' capital structure? Exploring the role of firm risk and profitability

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
A. D'Amato
Keyword(s):  
Capital Structure ◽  
Intellectual Capital ◽  
Value Added ◽  
Firm Risk ◽  
Financial Leverage ◽  
Data Set ◽  
Content Type ◽  
Novel Approach ◽  
Firm Profitability ◽  
The Relationship

PurposeThe purpose of this paper is to analyze the relationship between intellectual capital and firm capital structure by exploring whether firm profitability and risk are drivers of this relationship.Design/methodology/approachBased on a comprehensive data set of Italian firms over the 2008–2017 period, this paper examines whether intellectual capital affects firm financial leverage. Moreover, it analyzes whether firm profitability and risk mediate the abovementioned relationship. Financial leverage is measured by the debt/equity ratio. Intellectual capital is measured via the value-added intellectual coefficient approach.FindingsThe findings show that firms with a high level of intellectual capital have lower financial leverage and are more profitable and riskier than firms with a low level of intellectual capital. Furthermore, this study finds that firm profitability and risk mediate the relationship between intellectual capital and financial leverage. Thus, the higher profitability and risk of intellectual capital-intensive firms help explain their lower financial leverage.Research limitations/implicationsThe findings have several implications. From a theoretical standpoint, the paper presents and tests a mediating model of the relationship between intellectual capital and financial leverage and its underlying processes. In terms of the more general managerial implications, the results provide managers with a clear interpretation of the relationship between intellectual capital and financial leverage and point to the need to strengthen the capital structure of intangible-intensive firms.Originality/valueThrough a mediation framework, this study provides empirical evidence on the relationship between intellectual capital and firm financial leverage by exploring the underlying mechanisms behind that relationship, which is a novel approach in the literature.

The effect of the financial crisis on audit quality: European evidence

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maria I. Kyriakou
Keyword(s):  
Financial Crisis ◽  
Audit Quality ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Cross Sectional ◽  
Accounting Firms ◽  
Content Type ◽  
Financial Firms ◽  
The Impact ◽  
Big Four

Purpose This paper aims to examine the impact of the recent financial crisis on audit quality by analysing discretionary accruals. Design/methodology/approach This study considers a sample of German, French, Italian and Spanish non-financial firms from 2005 to 2013 to investigate the auditor’s independence. It uses a cross-sectional and time-series ordinary least squares regression model to control for other predictors of the auditor’s independence when the financial crisis produces a decrease in audit quality. Findings The proportion of the non-financial firms having lower audit quality was higher during the financial crisis. In addition, during the crisis auditors were less likely to provide a higher audit quality for these non-financial firms. The level of audit quality returned to normal levels during the post-crisis years when the crisis had ceased. Originality/value These findings contribute to the literature on the impact of economic and financial changes on audit quality. In addition, this research finds that the Big Four accounting firms provide a higher audit quality in different circumstances from non-Big Four accounting firms, and that audit quality decreased during the crisis and returned to normal in the post-crisis period.

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