scholarly journals Family ownership heterogeneity and audit committees independence and its implication towards the revised Malaysia code on corporate governance (MCCG, 2007)

2014 ◽  
Vol 11 (4) ◽  
pp. 456-462 ◽  
Author(s):  
Wan Masliza Wan Mohammad ◽  
Wan Fadzilah Wan Yusoff ◽  
Nik Mohamad Zaki Nik Salleh
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Family Firms ◽  
Audit Committees ◽  
Family Ownership ◽  
Agency Conflicts ◽  
Institutional Structures ◽  
Corporate Governance Reforms ◽  
Governance Reforms

This study examines the effectiveness of audit committee independence when moderated by firms’ family ownership. This is to investigate the implication of revised Malaysia Code on Corporate Governance (2007) that requires majority composition of independence directors in the audit committee. We study 1,206 firm-year observations between fiscal years 2004 to 2009 of firms listed in Bursa Malaysia. The findings suggest that independent directors are more effective in curbing earnings management when there is stronger ownership of family members. Our research offers insights on the important of family institutional structures on corporate governance reforms in Malaysia. Malaysian family firms are mostly traditional firms which have built their reputation and strength in the industry for many generations. The reputation built, improve shareholders confidence and reduce potential agency conflicts

scholarly journals Earnings management, audit committee effectiveness and the role of blockholders ownership: Evidence from UK large firms

2012 ◽  
Vol 1 (4) ◽  
pp. 100-116 ◽  
Author(s):  
Murya Habbash
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Family Firms ◽  
Agency Problems ◽  
Audit Committees ◽  
Effective Control ◽  
Agency Conflicts ◽  
Controlling Shareholders

The existing literature documents that the quality of financial reporting is higher when firms have effective audit committees. However, recent studies find that audit committees are not effective in family firms where agency conflicts arise between controlling and non-controlling shareholders. This study extends the previous findings by investigating the effectiveness of audit committees in firms with similar agency conflicts when one owner obtains effective control of the firm. Compared to firms with a low level of block ownership, high-blockholder firms face less agency problems due to the separation of ownership and management, but more severe agency problems between controlling (blockholders) and non-controlling shareholders (minority shareholders). Using a unique hand-collected sample, this study tests the largest 350 UK firms for three years from 2005 to 2007, and shows that firms with effective audit committees have less earnings management. This study also documents that the monitoring effectiveness of audit committees is moderated in firms with high blockholder ownership. The results are not sensitive to the endogeneity test and hold for alternative specifications of both dependent and independent variables. Overall, these findings suggest that audit committees are ineffective in mitigating the majority-minority conflict compared to their effectiveness in reducing owners-managers conflicts. These conclusions, along with some recent similar evidence (e.g., Rose, 2009 and Guthrie and Sokolowsky, 2010), may raise doubts about the monitoring role of blockholders asserted by agency theorists and widely accepted in corporate governance literature.

Effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia

2019 ◽  
Vol 10 (1) ◽  
pp. 74-99 ◽  
Author(s):  
Wan Masliza Wan Mohammad ◽  
Shaista Wasiuzzaman
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Family Firms ◽  
Family Ownership ◽  
Content Type ◽  
Listed Firms ◽  
Panel Data Regression ◽  
Effect Theory ◽  
History Of

Purpose The purpose of this paper is to investigate the effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia. Design/methodology/approach The effect of audit committee independence, board ethnicity and family ownership on corporate governance is investigated via 1,206 firm-year observations between the fiscal years of 2004 and 2009 of Bursa Malaysia listed firms. Panel data regression analysis is used to analyze the relationship. Findings The findings of this study fail to associate the role of audit committee independence as proposed under RMCCG (2007) in curtailing earnings management activities, thus supporting the findings on power distance scores that power granted to the top management may result in less effective independent directors. Nonetheless, in support of the alignment effect theory, family ownership is found to reduce earnings management activities. The findings show that corporate governance is more effective in developing country family firms due to their long history of family reputation and the importance of institutional culture factors. Research limitations/implications This study focuses on board ethnicity, family ownership and its influence on earnings management. Originality/value This study offers insights into the importance of family institutional structures on corporate governance reforms in Malaysia as Malaysian family firms are mostly traditional firms that have built their reputation and strength in the industry for many generations.

scholarly journals Non-executive directors and the changing nature of audit committees: Evidence from UK audit committee chairmen

2004 ◽  
Vol 1 (3) ◽  
pp. 108-115 ◽  
Author(s):  
Brian Windram ◽  
Jihe Song
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Committee Member ◽  
Audit Committees ◽  
Significant Shift ◽  
Executive Directors ◽  
Committee Chairman ◽  
Corporate Governance Reforms ◽  
Governance Reforms

In this paper we provide a descriptive summary of a postal survey of FT 500 UK company audit committee chairman on the operations of UK audit committees. The survey represents an “insider view” of the activities of audit committees and the characteristics of non-executive directors and contributes to the continuing debate on corporate governance reforms. In particular we report on company boards and their composition, audit committee chairman and their outside directorships, financial literacy and remuneration and various aspects of audit committee activity. Our survey shows that UK audit committees and corporate boards have undergone many changes in the last decade since the last comprehensive survey reported in Collier (1992). Our study on the current level of activity within major UK corporate audit committees deepens understanding of the roles and characteristics of non-executive directors and the operation of UK audit committees. In particular our survey shows that there is a significant shift in audit committee activities from the traditional financial reporting role to a greater focus on internal control and risk management. Independence is overwhelmingly seen as the most significant attribute of an audit committee member. Lack of time is perceived to be the greatest impediment to audit committee effectiveness but pressure from executives and an unclear remit are surprisingly prevalent problems even after ten years of corporate governance reforms.

The Influence of Family Ownership on Long-Lived Asset Write-Offs

2015 ◽  
Vol 28 (4) ◽  
pp. 355-371 ◽  
Author(s):  
Giulio Greco ◽  
Silvia Ferramosca ◽  
Marco Allegrini
Keyword(s):  
Firm Performance ◽  
Earnings Management ◽  
Agency Theory ◽  
Family Firms ◽  
Family Ownership ◽  
Agency Conflicts ◽  
Asset Value

Building on agency theory, this article investigates whether family firms’ accounting behavior regarding long-lived asset write-offs differs from that of nonfamily firms. We provide evidence that nonfamily firms use write-offs for earnings management purposes, while family firms report write-offs coherent with the firm performance. Family firms experience dwindling sales and lower profitability in the years following the write-offs, consistently with an effective decline in their assets value. The findings are consistent with reduced owner-manager agency conflicts in family firms. We find no indication of family entrenchment, which is consistent with family owners being concerned with the reputational damage associated with a loss of a firm’s asset value.

scholarly journals Pengaruh Kepemilikan Keluarga dan Likuiditas terhadap Agresivitas Pajak dengan Pemoderasi Corporate Governance

2020 ◽  
Vol 3 (2) ◽  
pp. 85-107
Author(s):  
Anggi Aditya Fahmi ◽  
Priyo Hari Adi
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Sampling Method ◽  
Stock Exchange ◽  
Audit Committees ◽  
Family Ownership ◽  
Manufacturing Companies ◽  
Tax Aggressiveness ◽  
Analysis Technique ◽  
Positive Effect

The purpose of this study is to find out how the influence of companies with family ownership and liquidity on tax aggressiveness which is moderated by corporate governance in manufacturing companies listed on the Indonesia Stock Exchange from 2013 to 2016. Corporate governance is proxied using independent commissioners and audit committees. The sample used in this study amounted to 212 selected using the purposive sampling method. The data analysis technique used are moderated regression analysis (MRA). The results showed that family ownership did not affect the tax aggressiveness, this means that companies with family ownership do not determine the company's actions in conducting tax aggressiveness. Liquidity has a significant positive effect on tax aggressiveness. The moderating variable of independent commissioners can moderate the influence of family ownership and liquidity on tax aggressiveness, while the moderating variable of the audit committee can moderate liquidity but cannot moderate family ownership against tax aggressiveness.    

scholarly journals Analisis Struktur Kepemilikan dan Good Corporate Governance terhadap Manajemen Laba pada Perusahaan di Bursa Efek Idonesia

2021 ◽  
pp. 220-225
Author(s):  
Jova Yolanda ◽  
Dian Efriyenti
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Board Of Directors ◽  
Audit Committee ◽  
Stock Exchange ◽  
Management Practice ◽  
Institutional Ownership ◽  
Audit Committees ◽  
Good Corporate Governance ◽  
The Board Of Directors

Earnings management practice is the decision to choose a particular accounting method that can achieve the goal of increasing reported profits or reducing investment losses. Misappropriation of financial statements by management can affect the amount of reported income. This study aims to determine whether ownership structure and good corporate governance have a significant influence on earnings management. The study was conducted on pharmaceutical sub-sector companies listed on the Indonesia Stock Exchange (IDX) in a row for the 2016-2020 period. The sample technique used is purposive sampling, so as many as 7 samples of companies are used. The data testing method uses multiple linear analysis. The results of the data test show that partially institutional ownership has a negative and significant effect on earnings management, independent commissioners, the audit committee, and the board of directors has a negative but not significant effect on earnings management. Simultaneously the results state that institutional ownership, independent commissioners, audit committees, and the board of directors have an effect but not significantly on earnings management.

scholarly journals Earnings Quality, Family Influence and Corporate Governance: Empirical Evidence from Malaysia

2021 ◽  
Author(s):  
◽  
Wan Adibah Binti Wan Ismail
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Family Firms ◽  
Earnings Quality ◽  
Governance Structure ◽  
Family Influence ◽  
Family Ownership ◽  
The Board Of Directors ◽  
And Control

<p>This study investigates whether family ownership and control, and corporate governance are associated with earnings quality, and whether family influence in firms weakens the association between corporate governance and earnings quality. This study uses a panel sample of 527 publicly traded firms over the period 2003-2008 from the Malaysia Stock Exchange (Bursa Malaysia). Identifying family firms as firms in which family members hold a significant portion of shares and possess control over the board of directors, this study finds that family firms have significantly higher earnings quality. The results remain unchanged, even after using alternative measures of earnings quality and family influence. This study also finds that the earnings quality of firms in Malaysia is positively associated with the size and independence of the audit committee and negatively associated with the size of the board of directors. However, these relationships exist only for nonfamily firms. These results on the corporate governance variables suggest that the effectiveness of corporate governance could be mediated by family influence. Using multivariate regressions that include interaction variables for corporate governance and family firms, the study finds that the relationship between corporate governance and earnings quality is mediated by family ownership and control. The result is consistent with the argument that the monitoring role of corporate governance reduces when there is substantial control by family owners in a firm. Overall, this study concludes that family ownership and control drives higher quality earnings for firms regardless of their corporate governance structure.</p>

scholarly journals The effect of earnings management and media exposure on corporate social responsibility disclosure with corporate governance as a moderating variable

2021 ◽  
Vol 10 (7) ◽  
pp. 220-229
Author(s):  
Ruri Rahayu ◽  
Gugus Irianto ◽  
Arum Prastiwi
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Audit Committee ◽  
Media Exposure ◽  
Audit Committees ◽  
Manufacturing Companies ◽  
Corporate Social Responsibility Disclosure ◽  
Corporate Social

This study aims to determine and analyze the effect of earnings management and media exposure on corporate social responsibility disclosure moderated by corporate governance. This study uses secondary data on manufacturing companies listed on the Indonesia Stock Exchange for a five-year period from 2016 to 2020. The sample selection used the purposive sampling method so that a total of 67 observations met the specified criteria. This study was tested using multiple linear regression and Moderated Regression Analysis. The results of this study provide empirical evidence that earnings management and media exposure have a positive effect on corporate social responsibility disclosure. Corporate governance with the proxies of the board of commissioners, independent commissioners and audit committees in weakening the influence of earnings management on corporate social responsibility disclosures each shows insignificant results. Meanwhile, corporate governance with the proxies of the board of commissioners and the audit committee was found to be able to strengthen the influence of media exposure on corporate social responsibility disclosure. However, independent commissioners cannot strengthen the influence of media exposure on corporate social responsibility disclosure.

Earnings Management and Corporate Governance in Family Firms

2019 ◽  
pp. 127-153
Author(s):  
Elisabete Vieira ◽  
Mara Madaleno
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Family Firms ◽  
Management Practices ◽  
Corporate Board ◽  
Listed Firms ◽  
Big 4 ◽  
Ownership Effect ◽  
And Control

Earnings management and corporate governance relationships are examined for a sample of 49 Portuguese listed firms considering an unbalanced panel for the period 2002-2017, using panel corrected standard errors models and considering the family ownership effect. Empirical findings reveal that there is a positive relationship between corporate board independence and earnings management and that the presence of women on board decreases earnings management practices. Results are consistent with the hypothesis that earnings management practices are lower in family firms than in non-family firms. Size, being audited by the Big 4 companies, return on assets, loss, and the existence of an audit committee on board influence positively earnings management, but leverage, age, and ownership control are negatively related to earnings management. Results indicate that further auditing and control is necessary for Portuguese listed companies leading to strict recommendations to be followed by policymakers regarding control of these firms.

Board and audit committee effectiveness in the post-ASX Corporate Governance Principles and Recommendations era

2017 ◽  
Vol 43 (10) ◽  
pp. 1137-1151 ◽  
Author(s):  
Maryam Safari
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Management Practices ◽  
Reporting Quality ◽  
Audit Committees ◽  
Content Type ◽  
Aggregate Effect

Purpose The purpose of this paper is to contribute to the corporate governance literature by examining the aggregate effect of board and audit committee characteristics on earnings management practices, particularly in the period following the introduction of the second edition of the Australian Securities Exchange (ASX) Corporate Governance Principles and Recommendations. Design/methodology/approach This paper begins by embarking on an extensive review of extant empirical research on boards of directors and audit committees. Then, the paper reports on the use of a quantitative analysis approach to specify the relationship between board and audit committee characteristics (introduced by the ASX Corporate Governance Council) and the level of absolute discretionary accruals as a proxy for earnings management. Findings The findings suggest that greater compliance with board and audit committee principles is linked to lower earnings management, indicating that deliberate structuring of boards and audit committees is an effective approach for enhancing a firm’s financial reporting quality and providing support for the efficacy of the second edition of principles and recommendations related to boards and audit committees suggested by the ASX Corporate Governance Council. Practical implications This study significantly extends the literature and has notable implications for financial reporting regulators, as the findings regarding the monitoring role of boards and audit committees should be beneficial for future revisions of corporate governance principles and recommendations. Originality/value This study focuses on the aggregate effect of board characteristics recommended by the Australian Corporate Governance Council on earnings management practices, and the results support the effectiveness of the board and audit committee characteristics recommended by the ASX Corporate Governance Council. New directions for future improvements to the principles and recommendations are identified.

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