Audit certification, earnings management and risk governance: a moderated-mediation analysis

2020 ◽  
Vol 18 (2) ◽  
pp. 277-299
Author(s):  
Imen Fakhfakh ◽  
Anis Jarboui
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Reporting Quality ◽  
Risk Governance ◽  
Audit Risk ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this study is to document the mediating effect of earnings management on the relation between the components of audit certification. The study is performed under different levels of corporate governance effectiveness in the Tunisian context. The main objective is to empirically examine the ability of discretionary accruals to mediate the relationship between the audit reporting quality and audit risk and to define how the levels of risk governance moderate this relation. Design/methodology/approach Structural equation modeling (SEM) approach is applied for a panel data set of 28 Tunisian companies listed in the Tunis Stock Exchange (TSE) between 2006 and 2013. Furthermore, a moderated-mediation model is developed to examine the mediating role of earnings management. This model is considered to emphasize the moderating role of corporate governance on the relationship between audit-reporting quality and audit risk. Findings The results of this study show that earnings management mediates the moderating role of corporate governance on the relationship between timely disclosure and audit risk. Thus, this investigation empirically demonstrates that risk governance moderates both the relationship between the timely disclosure and earnings management, and the relationship between earnings management and audit risk, i.e., the mediating role of earnings management varies depending on the level of risk governance. Practical implications Investors and other external users of financial statements need to care about the audit risk by the audit-reporting quality (audit accuracy and timely disclosure). Moreover, all factors that may influence the audit risk should be identified. This identification can help guide the reforms to improve the functioning of the financial market. Originality/value This study can enhance knowledge and understanding on how motivational and environment factors influence the audit risk. Using data from the Tunisian market, this work fills a research gap by examining the audit risk and identifies a new governance risk index. The specificity of the country where the study is elaborated refers to its accurate “revolutionary” transitional phase. Tunisia aims to enhance economic growth and to establish general strategic governance of the country, particularly strategic governance of companies.

Bullying and turnover intentions: how creative employees overcome perceptions of dysfunctional organizational politics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dirk De Clercq ◽  
Tasneem Fatima ◽  
Sadia Jahanzeb
Keyword(s):  
Organizational Climate ◽  
Workplace Bullying ◽  
Turnover Intentions ◽  
Organizational Politics ◽  
Content Type ◽  
Organizational Environments ◽  
Mediating Role ◽  
The Relationship ◽  
Moderating Role

PurposeThis study seeks to unpack the relationship between employees' exposure to workplace bullying and their turnover intentions, with a particular focus on the possible mediating role of perceived organizational politics and moderating role of creativity.Design/methodology/approachThe hypotheses are tested with multi-source, multi-wave data collected from employees and their peers in various organizations.FindingsWorkplace bullying spurs turnover intentions because employees believe they operate in strongly politicized organizational environments. This mediating role of perceived organizational politics is mitigated to the extent that employees can draw from their creative skills though.Practical implicationsFor managers, this study pinpoints a critical reason – employees perceive that they operate in an organizational climate that endorses dysfunctional politics – by which bullying behaviors stimulate desires to leave the organization. It also reveals how this process might be contained by spurring employees' creativity.Originality/valueThis study provides novel insights into the process that underlies the connection between workplace bullying and quitting intentions by revealing the hitherto overlooked roles of employees' beliefs about dysfunctional politics and their own creativity levels.

Organizational identification and employees’ innovative behavior: the mediating role of work engagement and the moderating role of creative self-efficacy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Guangning Zhang ◽  
Yingmei Wang
Keyword(s):  
Work Engagement ◽  
Organizational Identification ◽  
Self Efficacy ◽  
Innovative Behavior ◽  
Content Type ◽  
Mediating Role ◽  
Creative Self ◽  
The Relationship ◽  
Moderating Role

Purpose This study aims to investigate the effect of organizational identification to employees’ innovative behavior, the mediating role of work engagement and the moderating role of creative self-efficacy in the relationship between organizational identification and employees’ innovative behavior. Design/methodology/approach This study adopted questionnaires to gather data. The sample of 289 employees working in diverse organizations in China was applied to examine the hypotheses. Findings The results indicates that organizational identification is positively related to employees’ innovative behavior and work engagement mediates the relationship between organizational identification and employees’ innovative behavior. In addition, creative self-efficacy enhances the relationship of work engagement and employees’ innovative behavior. Originality/value This study builds a system from psychological aspect to behavior, which includes the effect of individual cognition to explain the mechanism of organizational identification on employees’ innovative behavior.

Organizational injustice and knowledge hiding: the roles of organizational dis-identification and benevolence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sadia Jahanzeb ◽  
Dirk De Clercq ◽  
Tasneem Fatima
Keyword(s):  
Well Being ◽  
Content Type ◽  
Mediating Role ◽  
Knowledge Hiding ◽  
The Relationship ◽  
Sense Of Obligation ◽  
Moderating Role ◽  
Practical Implications ◽  
Organizational Injustice

PurposeWith a basis in social identity and equity theories, this study investigates the relationship between employees' perceptions of organizational injustice and their knowledge hiding, along with the mediating role of organizational dis-identification and the potential moderating role of benevolence.Design/methodology/approachThe hypotheses were tested with three-wave survey data collected from employees in Pakistani organizations.FindingsThe experience of organizational injustice enhances knowledge hiding because employees psychologically disconnect from their organization. This mediation by organizational dis-identification is buffered by benevolence or tolerance for inequity, which reduces employees' likelihood of reacting negatively to the unfavourable experience of injustice.Practical implicationsFor practitioners, this study identifies organizational dis-identification as a key mechanism through which employees' perceptions of organizational injustice spur their propensity to conceal knowledge, and it reveals how this process might be mitigated by a sense of obligation to contribute or “give” to organizational well-being.Originality/valueThis study establishes a more complete understanding of the connection between employees' perceptions of organizational injustice and their knowledge hiding, with particular attention devoted to hitherto unspecified factors that explain or influence this process.

A moderated mediation model of the relationship between organizational justice and turnover intention

2019 ◽  
Vol 27 (4) ◽  
pp. 1073-1092 ◽  
Author(s):  
Emre Burak Ekmekcioglu ◽  
Enver Aydogan
Keyword(s):  
Organizational Justice ◽  
Psychological Contract ◽  
Turnover Intention ◽  
Mediation Model ◽  
Content Type ◽  
Mediating Role ◽  
Moderated Mediation Model ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this study is to examine the mediating role of organizational identification (OI) on the relationship between organizational justice (OJ) and turnover intention (TI), as well as the moderating role of psychological contract fulfillment (PCF) in those relationships. Design/methodology/approach Data were collected from 339 employees of a financial institution in Turkey. Regression analyses were conducted to investigate a moderated mediation model. Findings This study found that OI was partially mediated the relationship between OJ and TI. The results also indicated that the indirect effect of OJ on TI through OI was moderated by PCF. Research limitations/implications The generalizability of the findings is limited. As this study is cross-sectional, causal inferences cannot be inferred regarding the hypothesized relationships. Practical implications To reduce TI, organizations should ensure the fair allocation of resources and rewards among employees. Moreover, organizations should pay attention to the expectations of employees and the promises made to them in an attempt to fulfill psychological contract obligations. Originality/value This study explores the mediating role of OI in the relationship between OJ and TI. In addition, this research sheds light on the moderating role of PCF in this mediation model.

Impact of corporate governance on capital structure: mediating role of cost of capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aisha Javaid ◽  
Mian Sajid Nazir ◽  
Kaneez Fatima
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship

PurposeThis paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating role of cost of capital in the non-financial firms listed on the Pakistan Stock Exchange (PSX).Design/methodology/approachThe sample for this study includes non-financial firms listed on the Pakistan Stock Exchange (formerly Karachi Stock Exchange) for the period of 2004–2016. Based on 1800 firm-year observations, three approaches of panel data analysis are applied for the step-wise analysis of the underlying study. Firstly, Pooled OLS is applied. Secondly, fixed and random effect panel regression followed by the Hausman test to check the unobservable individual heterogeneity of the data. Hausman test indicates that the fixed-effects model is the most appropriate model for the sample panel data.FindingsThe study's findings are that board size, board composition, CEO/Chair duality, institutional ownership and managerial ownership have statistically significant direct effect on the firm's financing decisions. However, CEO/Chair duality, institutional ownership and managerial ownership have significant indirect effect on firm's capital structure decisions. The interesting finding of the paper is on the evidence of mediating role of cost of capital in the nexus of corporate governance and capital structure. Moreover, some conventional determinants of capital structure, including the firm's size, asset structure of the firm, profitability, business risk and growth, are found as determinants of capital structure decisions of the firms.Research limitations/implicationsThere are a few limitations to our study which could be addressed by upcoming research. We did not include all the four mechanisms of corporate governance including board structure, audit structure, compensation structure and ownership structure. However, we used only five important attributes including board size, board composition and CEO/Chair duality form board structure, managerial ownership and institutional ownership form ownership structure of corporate governance as our explanatory variables to examine their impact on the capital structure choices of the firms. Future studies may fill this research gap by involving some other attributes of corporate governance and analyzing their effectiveness and impact on value relevant capital structure decisions. Further, due to limited time and resources, we only tested the mediating role of cost of capital, hence, future researchers can analyze the mediating and moderating roles of different variables which may influence the relationship between corporate governance and capital structure choices of the firms.Practical implicationsThe study has many valuable guidelines and practical implications for the financial managers of the corporations. Our results will facilitate the policymakers in setting their corporate governance policies and practices and making the value relevant capital structure decisions in compliance with the implications of corporate governance mechanism. In addition, our study provides the empirical evidence in accordance with the argument that good governance practices, particularly the voluntary disclosures by the firm may reduce the information asymmetry which, ultimately, reduces the agency cost and the cost of capital for the firm. However, while deciding the financial policy of the corporations, managers can use our findings in order to assess the effectiveness of corporate governance practices employed by the firm in achieving the optimal capital structure at which the weighted average cost of capital is at its minimum level.Originality/valueThis paper contributes to the literature by investigating the mediating role of the cost of capital in the relationship between corporate governance and capital structure decisions of the firms. This paper provides empirical evidence that corporate governance indirectly affects capital structure decisions through the mediating role of cost of capital.

Exchange ideology and employee creativity: a moderated mediation analysis

2020 ◽  
Vol 58 (7) ◽  
pp. 1375-1395
Author(s):  
Zhigang Song ◽  
Qinxuan Gu
Keyword(s):  
Shared Leadership ◽  
Negative Relationship ◽  
Moral Leadership ◽  
Employee Creativity ◽  
Content Type ◽  
Mediating Role ◽  
Exchange Ideology ◽  
The Relationship ◽  
Moderating Role

PurposeThis paper aims to investigate the relationship between exchange ideology and employee creativity based on the social exchange perspective. It also attempts to examine the mediating role of perceived shared leadership and the moderating role of vertical moral leadership.Design/methodology/approachMultilevel and multisource data were collected from 56 research and development (R&D) teams with 306 employees. Hypotheses were tested with multilevel path analysis.FindingsThe authors found that exchange ideology was negatively related to both perceived shared leadership and employee creativity, and perceived shared leadership mediated the relationship between exchange ideology and employee creativity. Moreover, we revealed that vertical moral leadership buffered the negative relationship between employee exchange ideology and perceived shared leadership and also the indirect effect of exchange ideology on employee creativity via perceived shared leadership.Research limitations/implicationsOrganizations should select employees with a relatively weak exchange ideology when forming teams to conduct creative tasks. Moreover, team leaders should make great efforts to facilitate the development of shared leadership among team members while to be a moral leader.Originality/valueThis study extends creativity literature by investigating the effect of exchange ideology on employee creativity. It also sheds lights on leadership research by examining the mediating role of perceived shared leadership and the moderating role of vertical moral leadership.

Authentic leadership and creativity: the mediating role of happiness

2017 ◽  
Vol 25 (3) ◽  
pp. 395-412 ◽  
Author(s):  
Ana Suzete Dias Semedo ◽  
Arnaldo Fernandes Matos Coelho ◽  
Neuza Manuel Pereira Ribeiro
Keyword(s):  
Structural Equation ◽  
Authentic Leadership ◽  
Group Analysis ◽  
Well Being ◽  
Organizational Level ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship ◽  
Moderating Role

Purpose Authentic leadership (AL) as a style can influence, directly or indirectly, employees’ attitudes and behaviors. In this perspective, the purpose of this study is to investigate how AL predicts affective well-being (AWB) and employees’ creativity. The mediating role of AWB and the moderating role of satisfaction with management will be analyzed. Design/methodology/approach The researchers have analyzed the data from a questionnaire administered to a sample of 543 employees belonging to various public and private organizations in Cape Verde. Structural equation modelling was used to test the proposed hypotheses and a multi-group analysis was performed to identify how the level of satisfaction with the management may impact the proposed relationships. Findings The results of this study reveal that perceptions of AL predict employees’ creativity both directly and through the mediating role of AWB. Satisfaction with the management seems to moderate the relationship between AL, AWB and creativity. Practical implications The research outcomes suggest that organizations should focus on training leaders who value self-awareness and transparency in their relationships with others, who display an internal moral perspective and demonstrate balanced processing of information, to guarantee good results at the individual level and, consequently, at the organizational level. This study provides practitioners with possible routes to act in favor of a much happier and more creative workforce. Originality/value The originality of this study is because of the integration of these four concepts in a single study, providing evidence of the relationship between AL and creativity through the mediating role of AWB and moderating role of satisfaction with the management.

Earnings management: a strategic adaptation or deliberate manipulation?

2020 ◽  
Vol 27 (2) ◽  
pp. 369-386
Author(s):  
Shathees Baskaran ◽  
Nalini Nedunselian ◽  
Chun Howe Ng ◽  
Nomahaza Mahadi ◽  
Siti Zaleha Abdul Rasid
Keyword(s):  
Earnings Management ◽  
Investor Sentiment ◽  
Ethical Orientation ◽  
Content Type ◽  
Strategic Adaptation ◽  
Literature Synthesis ◽  
Conceptual Study ◽  
The Relationship ◽  
Moderating Role

Purpose This study aims to clarify the relationship between ethical orientation and earnings management perception phenomenon in the organization. It discusses to what extent earnings management is considered as a strategic adaptation or deliberate manipulation in an organization. The study also aims to expand the domain of ethical perspective of earnings management by considering mediating and moderating role of investor sentiment and corporate social responsibility (CSR) as inward pressure and outward commitment surrounding the organization, adopting a combined perspective of strategic management and also accounting discipline than is normally found in the ethics and earnings management literature. Design/methodology/approach The study opted for literature synthesis to define key concepts surrounding ethics and earnings management perception in the organization. Besides, it attempted to identify influential mediators and moderators in explaining the earnings management phenomenon in the organization. Consequently, the study identified the gaps in current research to draw upon a more holistic conceptual framework. The rationale for the research was justified within the body of research. Findings The study suggested research propositions based on the literature synthesis in view of ethics and earnings management perception in the organization. More specifically, it has proposed a conceptual framework, explaining the relationship between ethical orientation and a multi-dimensional view of earnings management perception. It is envisaged that the mediating and moderating role of investor sentiment and CSR incorporated in this conceptual study will improve the predictive value of the proposed framework and offer additional insights about factors that inhibit or advance ethical orientation and earnings management practices in the organization. Research limitations/implications This paper suffers from the obvious limitation of lacking empirical investigation. However, it does provide a theoretical rationale for the argument that alteration of earnings can be controlled if ethical orientation is emphasized in the organization apart from insulating internal and external pressures to manage such phenomenon from happening in the organization. Perhaps, the most important direction for future research is further extension and validation of this framework by performing an empirical investigation to produce newer insights into this phenomenon. Originality/value This conceptual study is different from previous studies on the grounds it has considered unexplored issues linking inward pressures and outward commitments in explaining this phenomenon further. To bridge the critical knowledge gap of earnings management phenomenon, a mediating effect of investor sentiment as an inward pressure and a moderating role of CSR as an outward commitment are also integrated within the model. The proposed model neither formulated nor tested empirically in previous studies locally or, perhaps, globally, therefore, stands out as an original contribution in the study of ethical orientation and earnings management perception.

Strategic renewal of SMEs: the impact of social capital, strategic agility and absorptive capacity

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samar Hayat Khan ◽  
Abdul Majid ◽  
Muhammad Yasir
Keyword(s):  
Social Capital ◽  
Strategic Management ◽  
Absorptive Capacity ◽  
Content Type ◽  
Strategic Renewal ◽  
Mediating Role ◽  
Strategic Agility ◽  
The Relationship ◽  
Moderating Role

PurposeThis research was carried out with the purpose to empirically test the model to explain the procedures concerned with the translation of social capital (SC) into strategic renewal (SR) of SMEs in developing economy like Pakistan. This procedure involves the mediating role of firms' strategic agility (SA) as well as the contingent effects of firms' absorptive capacity (AC).Design/methodology/approachThis study employed a cross-sectional design to evaluate the hypothesized model. To validate the moderated mediation model, data was collected from 519 CEOs, owners, finance managers and managing directors of 123 manufacturing units dealing in agricultural machinery (32 units), automobile accessories (16 units), pharmaceutical instrument (11 units), electrical equipment (25 units), IT related accessories (21 units) and garments (18 units).FindingsThe findings of the study confirm a positive association between SC on SR. Moreover, results also validate the mediating role of SA in the relationship between SC and SR. In addition, the moderating role of AC is also confirmed and presented this construct as a catalyst in the relationship between SC and SR.Practical implicationsThis research provides new endeavors for strategic management and strategic entrepreneurship literature by focusing on distinctive resources such as SC with its different facets. Therefore, it provides a new dimension and a roadmap that will be beneficial to the achievement of the objectives of SR.Originality/valueThe findings of this research have contributed to the streams of strategic management perspective by emphasizing upon the mediating mechanism how SC can be transformed into SR of SMEs through SA. Findings of the research also contribute to understand the moderating role of AC, and how its association with SC and SA augments the effects on SR of firms.

scholarly journals The impact of corporate governance mechanisms on real and accrual earnings management practices: evidence from Jordan

2019 ◽  
Vol 19 (6) ◽  
pp. 1167-1186 ◽  
Author(s):  
Lara Al-Haddad ◽  
Mark Whittington
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Management Practices ◽  
Reporting Quality ◽  
Content Type ◽  
Public Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact

Purpose This paper aims to investigate the impact of corporate governance (CG) mechanisms on real (REM), accrual-based earnings management (AEM) and REM/AEM interaction in Jordan following the 2009 Jordanian CG Code (JCGC). Design/methodology/approach The study used a sample of 108 Jordanian public firms covering 2010-2014. Hypotheses are tested using pooled OLS-regression models. Findings The authors find that both institutional and managerial ownership constrain the use of REM and AEM. In contrast, both independent directors and large shareholders are found to exaggerate such practices, and CEO-duality is found to exaggerate REM only. However, foreign ownership does not appear to have a significant impact. They further find that managers use REM and AEM jointly to obtain the greatest earnings impact. Practical implications The findings have important implications for policymakers, regulators, audit professionals and investors in their attempts to constrain earnings management (EM) practices and improve financial reporting quality in Jordan. Originality/value The authors believe this to be the first Jordanian study examining the relationship between CG mechanisms and both REM and AEM following the introduction of the 2009 JCGC, as well as the first in Jordan and the Middle East to examine board characteristics and REM. Moreover, it is the first to test for the potential substitution of REM and AEM since the 2009 JCGC enactment. As such, the findings draw attention to EM practices and the role of monitoring mechanisms in Jordan.

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