scholarly journals Post-2001 corporate collapses: Is earnings quality more closely associated with various dimensions of corporate governance?

2011 ◽  
Vol 9 (1) ◽  
pp. 455-476
Author(s):  
Madonna O’Sullivan ◽  
Majella Percy ◽  
Peta Stevenson-Clarke
Keyword(s):  
Corporate Governance ◽  
Audit Quality ◽  
Earnings Quality ◽  
Information Environment ◽  
Four Dimensions ◽  
High Profile ◽  
Before And After ◽  
Reported Earnings ◽  
Economic Considerations

We investigate the association between various dimensions of corporate governance and the quality of reported earnings for Australian companies in 2000 and 2002, before and after a number of large corporate collapses. We create four dimensions of corporate governance (board, committee, ownership and audit quality) using fifteen individual corporate governance attributes. We find only audit quality appears to improve earnings quality, and only in 2002. Further, we find earnings quality is positively related to firm size and information environment, and negatively related to firm leverage, for the combined 2000-2002 sample. We interpret these results as indicative of economic considerations having an overriding impact on earnings quality, compared to corporate governance, despite the shockwaves felt from recent high-profile corporate collapses

Value Relevance of Earnings Quality: Importance of Corporate Governance, Ownership Structure and Group Affiliations in the Listed Firms of Pakistan

2020 ◽  
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Value Relevance ◽  
Earnings Quality ◽  
Panel Data Analysis ◽  
Business Group ◽  
Group Affiliation ◽  
Business Group Affiliation ◽  
Reported Earnings

This study is an endeavor to answer the question that does corporate governance, ownership pattern and business group affiliation effect value relevance of reported earnings quality in a sample of 300 listed Pakistani firms for the period of 2006-2018. The study uses earnings response coefficient and earning predictability as proxy of reported earnings quality. The panel data analysis shows that CEOduality and director ownership have significant inverse effect on the quality of reported earnings i.e. the two do not contribute towards improvement of quality of reported earnings. Whereas board independence, independence of audit committee and external audit from big4, institutional ownerships have significant direct effect on the quality of reported earnings. Moreover, it is observed that these effects are relatively more prominent in the case of group firms. Furthermore, firm size, earning persistence, growth and leverage have positive association with the quality of reported earnings while beta has significant negative effect on the quality of earnings. Further, it is found that in times of financial crisis, firms improve its reporting quality to uphold confidence of the investors where group firms showed relatively more tending to pursue this practice. This study has several implications for shareholders, prospect investors, external auditors and regulators. This is the first study of its nature that has investigated the role of group affiliation with reported earning quality. Key words: Earnings quality, corporate governance, ownership structure, business group affiliation, ERC.

scholarly journals DIVIDEND POLICY, CORPORATE GOVERNANCE AND EARNINGS QUALITY: A CASE OF NON-FINANCIAL LISTED FIRMS OF PAKISTAN

2021 ◽  
Vol 9 (3) ◽  
pp. 517-530
Author(s):  
Tehmina Afzal ◽  
Atif Atique Siddiqui ◽  
Shiraz Khan ◽  
Muhammad Kamran Khan ◽  
Nader Huseen
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Firm Size ◽  
Dividend Policy ◽  
Audit Quality ◽  
Negative Impact ◽  
Earnings Quality ◽  
Earning Quality ◽  
The Impact

Purpose of the study: This research empirically examined the impact of the dividend policy and corporate governance attributes (board size, board meetings, audit quality, nomination committee, board independence, remuneration committee, and CEO duality) on earnings quality (EQ) of the firms in Pakistan. Methodology: The study used secondary data of 148 non-financial listed companies of the Pakistan Stock Exchange (PSX) with 1450 firm-year observations over 10 years from 2010 to 2019. Earning quality was assessed by the earnings management, while the values of the discretionary accruals were used to measure earnings management by employing the Modified jones model (1995). Panel regression analysis examined the impact of independent variables (dividend policy & characteristics of CG) on the dependent variable (EQ). Main Findings: Results revealed that the dividend policy showed no significant impact on earnings quality. Also, the results indicated that the audit quality and remuneration committee have a significant negative impact on earning management and a positive impact on earning quality. However, the results illustrate that the large board size, board meetings, CEO duality, firm size, and leverage have a positive influence on earnings management and a negative impact on earnings quality. Overall the study found that the corporate governance characteristics, firm size, and leverage influence the earnings quality of the firms in Pakistan. Applications of this study: The empirical results of the study will help to improve the understanding of dividend policy & corporate governance attributes in relationship with the EQ. Second, as dividend is considered one of the most important factors influencing investment decisions, so this endeavour will clarify to the investors and regulators that whether dividend will predict the quality of earnings in Pakistani firms. Novelty/Originality of this study: This study extends the literature of earnings quality that is very thin in Pakistan.

scholarly journals Does chairman independence matter?

2010 ◽  
Vol 8 (1) ◽  
pp. 108-116
Author(s):  
Hafiza Aishah Hashim ◽  
Susela Devi Suppiah
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Earnings Quality ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Leadership Structure ◽  
Reported Earnings ◽  
The Relationship

This paper examines the relationship between the role of non-executive (independent) chairman and the quality of reported earnings. Recent corporate governance reforms recommend firms to appoint an independent leader to ensure the success of a split leadership structure (The Combined Code on corporate Governance, 2006; Higgs Report, 2003). Research on leadership structure to date has tended to focus solely on role duality and find weak or insignificance relationship between role duality and financial reporting quality. Although separating the roles of the chairman and the CEO seems appropriate, researcher argue that it would not necessarily lead to independence of the board if the chairman is not independent. Consistent with recent recommendations to strengthen board leadership by appointing an independent chair, this study evidences a positive and significant association between non-executive chairman and earnings quality in Malaysia. The study suggests that the non-executive status of the chairman is an important mechanism in enhancing the board‟s independence, thus improving earnings quality.

scholarly journals Heterogeneity in earnings quality between different classes of companies after IFRS adoption: evidence from Brazil

2017 ◽  
Vol 28 (73) ◽  
pp. 113-131
Author(s):  
Roberto Black ◽  
Sílvio Hiroshi Nakao
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Relevance ◽  
Earnings Quality ◽  
Economic Incentives ◽  
Net Income ◽  
Accounting Earnings ◽  
Ifrs Adoption ◽  
Before And After

ABSTRACT This paper aims to investigate the existence of heterogeneity in earnings quality between different classes of companies after the adoption of the International Financial Reporting Standards (IFRS). IFRS adoption is generally associated with an increase in the quality of financial statements. However, companies within the same country are likely to have different economic incentives regarding the disclosure of information. Thus, treating companies equally, without considering the related economic incentives, could contaminate earnings quality investigations. The case of Brazil is analyzed, which is a country classified as code-law, in which tax laws determined accounting practice and in which IFRS adoption is mandatory. First, Brazilian companies listed on the São Paulo Stock, Commodities, and Futures Exchange (BM&FBOVESPA) were separated into two classes: companies issuing American Depositary Receipts (ADRs) before IFRS adoption and companies that did not issue ADRs until the adoption of IFRS. Then, this second class of companies was grouped, using cluster analysis, into two different subclasses according to economic incentives. Based on the groups identified, the quality of accounting earnings is tested for each class of the companies before and after IFRS adoption. This paper uses timely recognition of economic events, value relevance of net income, and earnings management as proxies for the quality of accounting earnings. The results indicate that a particular class of companies began showing conditional conservatism, value relevance of net income, and lower earnings management after IFRS adoption. On the other hand, these results were not found for the two other classes of companies.

scholarly journals Audit Quality and Disclosures of Less-Experienced Participating Audit Firms in PCAOB Filings

2020 ◽  
Vol 14 (2) ◽  
pp. P1-P8
Author(s):  
Carol Callaway Dee ◽  
Ayalew Lulseged ◽  
Tianming Zhang
Keyword(s):  
Audit Quality ◽  
Audit Fees ◽  
Future Research ◽  
Subsequent Increase ◽  
Market Prices ◽  
Quarterly Earnings ◽  
Audit Firms ◽  
Reported Earnings ◽  
The Universe

SUMMARY In “Who Did the Audit? Audit Quality and Disclosures of Other Audit Participants in PCAOB Filings” (Dee, Lulseged, and Zhang 2015), we examine quality for issuer audits disclosed as involving less-experienced “participating auditors.” We find that market prices of these issuers reacted negatively at the time of disclosure, and investors' valuations of their post-disclosure quarterly earnings declined; investors have greater uncertainty in the numbers reported. In addition, the quality of the reported earnings is lower. However, we do not see a subsequent increase in audit fees, which suggests clients do not increase demands for higher quality to counteract the uncertainty in investors' perceptions of audit quality. Since our sample is limited to less-experienced participating auditors, the results are not readily generalizable to the universe of participating auditors. Future research using Form AP data can explore if our findings are generalizable to issuer audits involving the wider population of participating auditors.

Audit Committee Characteristics and Earnings Quality

2020 ◽  
pp. 23-49
Author(s):  
Fatima Albedal ◽  
Allam Mohammed Hamdan ◽  
Qasim Zureigat
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Earnings Quality ◽  
Listed Companies ◽  
Independent Variables ◽  
Pooled Data ◽  
Data Regression ◽  
Code Of Corporate Governance ◽  
The Relationship

This chapter investigates the relationship between the audit committee and earnings quality of listed companies in Bahrain Bourse and to examine whether those companies comply with the obligatory code of corporate governance. The sample of this study includes 40 companies listed in Bahrain Bourse for the period 2013-2017. The model of the study tested the relationship between the independent variables of audit committee characteristics and the dependent variable of earnings quality using pooled data regression. The findings of the study showed that the Bahraini listed companies comply and follow the code of corporate governance and some audit committee characteristics have an impact on earnings quality.

scholarly journals Effect of corporate governance board leadership models and attributes on earnings quality of quoted nigerian companies

2019 ◽  
Vol 6 (1) ◽  
pp. 1683124 ◽  
Author(s):  
Cosmas Ikechukwu Asogwa ◽  
Grace Nyereugwu Ofoegbu ◽  
Judith Ima Nnam ◽  
Onyekachi David Chukwunwike
Keyword(s):  
Corporate Governance ◽  
Earnings Quality ◽  
Leadership Models ◽  
Board Leadership
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