scholarly journals The Role of External Auditors in Corporate Governance: Agency Problems and the Management of Risk

2009 ◽  
Author(s):  
Marianne Ojo
Keyword(s):  
Corporate Governance ◽  
Agency Problems ◽  
External Auditors ◽  
Management Of Risk

scholarly journals The role of the external auditor in corporate governance: The case of companies listed in the NYSE Euronext Lisbon

2019 ◽  
Vol 8 (4) ◽  
pp. 38-51 ◽  
Author(s):  
José Manuel Bernardo Vaz Ferreira
Keyword(s):  
Corporate Governance ◽  
Multiple Regression ◽  
Direct Relationship ◽  
Logistic Models ◽  
Agency Problems ◽  
Securities Market ◽  
External Auditors ◽  
External Auditor ◽  
Economic Crimes

This study investigates the effects of the presence of the external auditor on corporate governance in Portugal, in the way listed companies are managed, based on the verification of compliance with the corporate governance regulations of the Securities Market Commission, as well as the transparency of information and the reduction of agency problems, fraud and economic crimes. By comparing government reports of companies listed on NYSE Euronext Lisbon, during several periods and with surveys conducted in the 1st half of 2013 in Portugal to the external auditors responsible for the majority of the legal certification of accounts of companies during 2007 to 2011, a significant direct relationship in the fulfillment of the recommendations of corporate governance and its verification by the external auditor is concluded. Based on multiple regression and multinomial logistic models, it is concluded that a greater involvement of the ROC in complying with corporate governance recommendations, allows for greater transparency of information and a reduction of agency problems, fraud and economic crimes

scholarly journals Stewardship theory: is board accountability necessary?

2017 ◽  
Vol 59 (6) ◽  
pp. 1292-1314 ◽  
Author(s):  
Andrew Keay
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Design Methodology ◽  
Agency Problems ◽  
Stewardship Theory ◽  
Content Type ◽  
General Terms ◽  
Practical Implications

Purpose The purpose of the paper is to demonstrate that notwithstanding the fact that stewardship theory embraces things like trust of directors, their professionalism, loyalty and willingness to be concerned for the interests of others, as well as rejecting the foundations of classic agency problems that are asserted by agency theory, board accountability is as relevant to stewardship theory as it is to agency theory. Design/methodology/approach The paper applies the theory underlying board accountability in corporate governance, which is so often applied both in the corporate governance literature and in practice with agency theory in mind, to stewardship theory. Findings While the idea of accountability of boards is generally associated with an explanation and conceptualisation of the role and behaviour of directors as agents within classic agency theory, the paper demonstrates that board accountability is a necessary part of board life even if the role of directors is explained and conceptualised in terms of stewardship theory. Practical implications The paper suggests some accountability mechanisms that might be employed in a stewardship approach. Originality/value While many authors have talked in general terms about board accountability and its importance, this is the first paper that has engaged in a substantial study that links board accountability directly with stewardship theory, and to establish that accountability is necessary.

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

2020 ◽  
Vol 4 (15) ◽  
Author(s):  
Lamis Jameel Banasser, Maha Faisal Alsayegh
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Auditors ◽  
External Auditors ◽  
Riyadh City ◽  
Creative Accounting ◽  
Telecommunications Sector

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.

Corporate governance and information technology in fraud prevention and detection

2016 ◽  
Vol 31 (6/7) ◽  
pp. 589-628 ◽  
Author(s):  
Sawsan Saadi Halbouni ◽  
Nada Obeid ◽  
Abeer Garbou
Keyword(s):  
Information Technology ◽  
Corporate Governance ◽  
Boards Of Directors ◽  
Senior Management ◽  
Fraud Prevention ◽  
Content Type ◽  
External Auditors ◽  
Detection Techniques ◽  
Significant Difference

Purpose This paper aims to investigate the role of corporate governance and information technology in fraud prevention and detection within the United Arab Emirates (UAE). Design/methodology/approach This study uses a survey of financial accountants and internal and external auditors to assess their perceptions of the effectiveness of IT and corporate governance as measured in terms of the audit committee’s effectiveness, internal audit functions, external audit functions, culture of honesty and employee training programmes in preventing and detecting fraud in the UAE. Findings The results indicate that corporate governance has a moderate role in preventing and detecting fraud in the UAE and that IT has the same role as traditional fraud prevention and detection techniques. The results also show no significant difference between internal and external auditors in their use of technological and traditional techniques during the course of audits. Research limitations/implications The findings suggest that the senior management and boards of directors must better understand the importance of their oversight function. The finding that a culture of honesty has a low positive impact on fraud prevention and detection in the UAE indicates that chief executive officers and boards of directors must make more efforts to set the “tone at the top” to improve the corporate environment in terms of integrity and ethics, among other factors. Furthermore, as IT and traditional techniques provide the same function, senior management and boards of directors must be alerted to the importance of developing systematic approaches to fraud investigation that involve greater reliance on technological approaches. Practical implications The moderate role of corporate governance suggests that senior management and boards of directors must better understand the importance of their oversight function to meet their obligations and fiduciary responsibilities to stakeholders. Furthermore, greater adoption of IT to detect and prevent fraud contributes to developing a systematic approach to fraud investigation, capable of identifying unusual activity using effective software. Originality/value This study contributes to the literature on the role of corporate governance and IT in preventing and detecting fraud, particularly for Middle Eastern countries and other emerging nations. The study may provide insights to academics and practitioners in the UAE and their international counterparts.

scholarly journals Ways to solve agency problems in corporate structures with using accounting information: non-institutional aspects

2019 ◽  
pp. 145-151
Author(s):  
Vasyl Tsaruk
Keyword(s):  
Corporate Governance ◽  
Agency Problem ◽  
Accounting Information ◽  
Agency Problems ◽  
Accounting System ◽  
Governance System ◽  
Opportunistic Behaviour ◽  
Logical Method ◽  
The Moment

Purpose. The aim of the article is to analyse and substantiate the ways to solve the consequences of an agency problem in corporate structures based on the use of accounting information. Methodology of the research. The theoretical basis of the research is the scientific works of domestic and foreign scientists on the problems of accounting information formation in the issues of solving agency problems in corporate structures. The following methods are used to achieve the goal of the study: general scientific methods (abstraction, comparison, generalization, analysis, synthesis) – to know the basic elements of accounting information; critical analysis and systematic approach – when disclosing the characteristics of the main elements of solving an agency problem in corporate structures; abstract and logical method – to formulate the conclusions of the study. Findings. The types of opportunistic behaviour regarding the moment of contracting according to agency theory are substantiated. The role of accounting information at the pre-contractual stage of activity of corporate structures is determined. The features of understanding of accounting as one of the basic elements of the corporate governance system, which allows to minimize the consequences of an agency problem, are revealed. The role of accounting information at the post-contracting stage of corporate structures activity is determined. Originality. The possibility of using accounting information for the implementation of opportunistic behaviour by agents in the activity of corporate structures is substantiated. The ability of the accounting system to counteract the hidden intentions that agents may have after contracting has been identified. A matrix classification of approaches to solving the consequences of agency problems in corporate structures has been developed. Practical value. Implementation of the components of accounting information proposed in the study will allow to substantiate the role of accounting information in the application of each of the selected approaches to solving the consequences of the agency problem in corporate structures. Key words: corporate governance; agency problem; adverse selection; moral hazard; accounting information.

scholarly journals Substitute governance structure and the effect of monitoring: Evidence from Bangladesh

2010 ◽  
Vol 8 (1) ◽  
pp. 9-23
Author(s):  
Mohammad Istiaq Azim
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Empirical Evidence ◽  
Governance Structure ◽  
Policy Implications ◽  
Corporate Governance Structure ◽  
External Auditors

This paper investigates the role of monitoring mechanisms in a corporate governance structure, focusing on listed companies in a developing country, Bangladesh. Specifically, it examines whether different interrelated monitoring mechanisms - board of directors and committee, management and external auditors - affect firm performance. This research found the possibility of having a substitution or complementary links in monitoring mechanisms that explain why there is no consistent empirical evidence between individual monitoring mechanisms and firm performance. This study has policy implications for the Bangladeshi corporate environment. Progress of implementation of the guidelines appears to be reasonable. However, credibility of the reported figures and quality of implementation remain open to discussion. To what extent these status reports reflect improved governance or are largely a form of paper compliance is a debatable issue. This research also suggests that when considering any change in corporate monitoring, the Bangladeshi government should take into account the nation‟s business, social structure, culture and legal practices.

Banks on Board: German and American Corporate Governance, 1870–1914

2010 ◽  
Vol 84 (4) ◽  
pp. 703-736 ◽  
Author(s):  
Jeffrey Fear ◽  
Christopher Kobrak
Keyword(s):  
Corporate Governance ◽  
Foreign Investment ◽  
Stock Exchange ◽  
Agency Problems ◽  
The United States ◽  
Investment Banks ◽  
Board Members ◽  
Corporate Boards ◽  
Control Speculation

This examination of the foundations of German and American corporate governance highlights the role of money-centered banks, both as board members in large corporations and as intermediaries on the stock exchange. German banks, by acting as surrogate regulators, became institutional stabilizers, and German regulators encouraged banks to participate in corporate boards in order to overcome agency problems in firms and to control speculation. American investment banks, prior to 1914, often managed to overcome regulatory obstacles, which enabled them to wield more power over corporations than their legendary German counterparts. American banks had more opportunities to intervene in the event of panics, bankruptcies, foreign investment, and corporate consolidation. In contrast to Germany, the United States increasingly imposed regulations that circumscribed the supervisory role of banks as board members.

Earnings opacity and corporate governance for Chinese listed firms: the role of the board and external auditors

2020 ◽  
Vol 28 (4) ◽  
pp. 487-515 ◽  
Author(s):  
Wing Him Yeung ◽  
Camillo Lento
Keyword(s):  
Corporate Governance ◽  
Reporting Quality ◽  
Listed Companies ◽  
Content Type ◽  
Listed Firms ◽  
External Auditors ◽  
Corporate Governance Mechanisms ◽  
Chinese Listed Companies ◽  
The Board Of Directors

PurposeThe purpose of this paper is to investigate the relationship between corporate governance and earnings opacity in China.Design/methodology/approachTwo corporate governance mechanisms form the basis of the analysis: 1) the board of directors and 2) the external audit function. OLS regression analysis is employed on a large sample from 2000 to 2014 with 20,235 firm-year observations.FindingsCorporate governance is found to be associated with reduced levels of earnings opacity for Chinese listed companies. Furthermore, the association between corporate governance and reduced levels of earnings opacity strengthened after the implementation of various key reforms.Practical implicationsChinese regulators are advised to proceed with caution as not all Western approaches to corporate governance are transferrable to the Chinese setting.Originality/valueThis study contributes to the literature by analyzing broad latent constructs of corporate governance in addition to individual observable dimensions in order to reveal that various key reforms have been successful in strengthening the link between governance and reporting quality for Chinese listed companies.

Oversight of audit quality in the UK: insights into audit committee conduct

2017 ◽  
Vol 25 (3) ◽  
pp. 351-367 ◽  
Author(s):  
Noor Adwa Sulaiman
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Audit Process ◽  
Content Type ◽  
External Auditors ◽  
Code Of Corporate Governance ◽  
The Uk

Purpose The purpose of this paper is to examine the conduct of the audit committee (AC) in terms of its oversight role of audit quality in the UK. Design/methodology/approach This study uses semi-structured interviews with 11 AC members and 11 audit partners. Findings The findings show that the conduct of the AC in relation to audit quality involves the assessment of the contents of the reports prepared by the external auditors for the AC. Furthermore, the oversight of audit quality by the AC involves a thorough assessment of the presentation of the external auditors during the interaction and communication between the two parties. This illustrates the AC’s role as an effective monitoring mechanism when overseeing the audit quality. However, the conduct of the AC in overseeing four major areas (independence, appointment, remuneration and effectiveness of audit process) related to audit quality, as recommended by the UK Code of Corporate Governance, provides mixed results. The findings highlight the ceremonial role of the AC in those areas, which demonstrates the limited supporting role of the AC in enhancing audit quality. Furthermore, it is suggested that the effectiveness of the oversight role is influenced by the quality of the chairman of the AC and the quality of the relationship between the AC and the external auditors. Originality/value This study contributes to the existing literature by providing additional insights into the conduct of the AC in overseeing audit quality as well as additional evidence concerning the role and effect of the AC in relation to audit quality as prescribed by the UK Code of Corporate Governance.

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