scholarly journals Are CEO experience and financial expertise associated with financial restatements?

2021 ◽  
Vol 24 (2) ◽  
pp. 270-281
Author(s):  
Zabihollah Rezaee ◽  
Kaveh Asiaei ◽  
Toktam Safdel Delooie
Keyword(s):  
Financial Reporting ◽  
Work Experience ◽  
Reporting Quality ◽  
Chief Executive ◽  
Director General ◽  
Negatively Associated ◽  
Financial Expertise ◽  
Financial Restatements ◽  
The Board Of Directors ◽  
Financial Expert

Este estudio examina si la experiencia del director general (CEO) y los conocimientos financieros afectan a las reformulaciones financieras (FR), y cómo lo hacen, investigando una muestra de empresas iraníes que cotizan en bolsa entre 2008 y 2017. Definimos a los consejeros delegados con experiencia como aquellos que son contratados desde dentro de la empresa y a los consejeros delegados expertos en finanzas como aquellos que poseen una cualificación contable o tienen experiencia laboral como auditor, director financiero (CFO), controlador u otros puestos relacionados con la contabilidad. Encontramos que FR está positivamente asociado a los CEOs con información privilegiada (CEOs con más experiencia interna), y negativamente asociado a la experiencia financiera del CEO. Además, encontramos que la experiencia del CEO se asocia negativamente con FR cuando el CEO es un experto financiero. Este resultado pone de manifiesto la importancia de la experiencia financiera de los altos ejecutivos. Además, nuestros resultados muestran que los directores generales con información privilegiada pueden mejorar la calidad de la información financiera reduciendo FR cuando tienen mayor poder de decisión. Este estudio contribuye a la literatura sobre las características de los directores generales y la información financiera. Los resultados ofrecen importantes implicaciones para los responsables políticos y los consejos de administración de las economías emergentes en lo que respecta a la exigencia de nombrar a altos directivos con conocimientos financieros. This study examines whether and how Chief Executive Officer (CEO) experience and financial expertise affect financial restatements (FR) by investigating a sample of Iranian listed companies from 2008 to 2017. We define experienced CEOs as those who are hired from inside the firm and financial expert CEOs as those who hold an accounting qualification or have work experience as an auditor, chief financial officer (CFO), controller, and or other accounting-related positions. We find that FR is positively associated with insider CEOs (CEOs with more internal experience), and negatively associated with CEO financial expertise. Moreover, we find that CEO experience is negatively associated with FR when the CEO is a financial expert. This result highlights the importance of financial background for senior executives. Further, our results show that insider CEOs can improve the financial reporting quality through reducing FR when they have higher decision-making power. This study contributes to the literature on CEO characteristics and financial reporting. The results provide important implications for policymakers and the board of directors in emerging economies regarding the requirement to appoint top managers with financial expertise.

CEO Financial Background and Audit Pricing

2016 ◽  
Vol 30 (3) ◽  
pp. 325-339 ◽  
Author(s):  
Rachana Kalelkar ◽  
Sarfraz Khan
Keyword(s):  
Financial Reporting ◽  
Chief Executive Officers ◽  
Work Experience ◽  
Audit Committee ◽  
Reporting Quality ◽  
Chief Executive ◽  
Audit Fees ◽  
Fixed Effect Model ◽  
Audit Pricing ◽  
Advantages And Disadvantages

SYNOPSIS Accounting scholars theorize that audit price is a function of a client's audit and business risk. Existing research finds that the functional expertise of Chief Executive Officers (CEOs) in finance improves financial reporting quality (Matsunaga, Wang, and Yeung 2013), increases profitability, and reduces the likelihood of firm failure (Custodio and Metzger 2014). These factors suggest that auditors' engagement risk decreases when incumbent CEOs possess financial expertise, raising the likelihood that auditors will charge these firms lower fees. In this study, we examine whether CEOs' work experience in accounting- and finance-related jobs affects audit fees. Using a panel of U.S. firms between 2004 and 2013, we find that firms that have a financial expert CEO pay lower audit fees. Our results are robust to various specifications, including firm-fixed effect model and specifications that control for other CEO- and Chief Financial Officer (CFO)-specific and audit committee characteristics. Our findings thus add to the literature on the advantages and disadvantages of a functional background of top managers and how this background can create value for a firm through savings in audit fees.

CEO Age and Financial Reporting Quality

2012 ◽  
Vol 26 (4) ◽  
pp. 725-740 ◽  
Author(s):  
Hua-Wei Huang ◽  
Ena Rose-Green ◽  
Chih-Chen Lee
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Earnings Forecasts ◽  
Positive Association ◽  
Chief Executive ◽  
Data Availability ◽  
Financial Reporting Quality ◽  
Financial Restatements ◽  
Ceo Age ◽  
Analyst Earnings

SYNOPSIS: This study examines the association between chief executive officer (CEO) age and the financial reporting quality of firms. The financial reporting qualities examined are the meeting or beating of analyst earnings forecasts and financial restatements. Based on extant research, we hypothesize that older CEOs are associated with higher-quality financial reporting. Using a sample of 3,413 firms for the period 2005 to 2008, we find a positive association between CEO age and financial reporting quality. Specifically, we find that CEO age is negatively associated with firms meeting or beating analyst earnings forecasts and financial restatements. Our study therefore extends the corporate governance and financial reporting quality literature by identifying CEO age as a determinant of financial reporting quality. Data Availability: Data are publicly available.

Evidence on the relation between audit committee financial expertise and internal audit function effectiveness

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Atef Oussii ◽  
Neila Boulila
Keyword(s):  
Financial Reporting ◽  
Work Experience ◽  
Audit Committee ◽  
Committee Member ◽  
Internal Audit ◽  
Reporting Quality ◽  
Certified Public Accountant ◽  
Content Type ◽  
Internal Audit Function ◽  
Financial Expertise

PurposeThe purpose of this paper aims to investigate whether the source of audit committee accounting expertise influences the internal audit function (IAF) effectiveness in the Tunisian setting.Design/methodology/approachIn the analysis, the authors conduct a survey of chief internal auditors from Tunisian listed companies. Then, a multivariate regression analysis is performed in order to analyze the relationship between audit committee financial expertise and IAF effectiveness.FindingsThe findings of the present study show that audit committee accounting financial expertise is most likely to be positively associated with the implementation of internal audit report recommendations. The authors also find that only financial expertise gained from accounting education and experience (e.g. an audit committee member with experience as a certified public accountant, auditor, chief financial officer or chief accounting officer) is associated with a stronger implementation of IAF recommendations, but not financial expertise gained from work experience in finance positions.Practical implicationsThese results may have implications for regulatory bodies. They can provide a better understanding of the role of the audit committee expertise in monitoring internal audit processes. The major contribution of this study is that the audit committee's oversight role is strengthened if the committee members have accounting and auditing expertise.Originality/valueThe study extends prior literature by providing evidence that the source of audit committee accounting financial expertise enhances internal audit effectiveness beyond the outcomes it has on financial reporting quality. The study also contributes to the ongoing debate in the corporate governance literature concerning the definition of the financial expertise of audit committee members.

scholarly journals Board characteristics and financial reporting quality: evidence from Jordan

2014 ◽  
Vol 11 (3) ◽  
pp. 8-29 ◽  
Author(s):  
Ebraheem Saleem Salem Alzoubi
Keyword(s):  
Board Of Directors ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Discretionary Accruals ◽  
Financial Reporting Quality ◽  
Board Independence ◽  
Board Characteristics ◽  
Financial Expertise ◽  
The Board Of Directors ◽  
Specific Expertise

This paper aims outspreading preexisting researches by assessing practically and empirically how board characteristics play a vibrant role in magnitude of earning management (EM) for the Jordanian listed companies. In particular, the paper throws its light on the principle features of the board of directors, i.e. board independence, CEO duality, financial expertise, governance expertise, firm-specific expertise and size. In this paper, a cross-sectional version of the Modified Jones Model is applied to ensure the accurate assessment of the key impacts of board characteristics on EM for a sample of 86 industrial listed companies on the Amman Stock Exchange (ASE) for the years 2008 to 2010. Discretionary accruals are used as proxy for EM. This study, on the basis of findings, reveals the significant correlation between salient board features and EM. Findings of this systematic observation demonstrate that board independence, financial expertise, governance expertise and size have a negative relation with EM. It also found that CEO duality and board firm-specific expertise have an obvious positive relation with discretionary accruals. The findings suggested that the board character has an effective role in detecting EM and in turn improve financial reporting quality (FRQ). In real fields, the discoveries of this paper portray valuable information for the regulators in different countries. The results also provide useful information for investors in assessing the impact of board characteristics on FRQ. In fact, previous studies on this very issue in this context do not meet the demand of comprehensive observation appropriately. To make input in this area, particularly among Jordanian companies, this study will extend the scope through providing empirically tested findings of the role of board directors’ characteristics on EM. In addition, this paper is the first empirical study to investigate the relationship between the board of directors’ characteristics and EM in Jordan.

scholarly journals An Investigation on the Audit Committees Effectiveness: The Case for GLCs in Malaysia

2011 ◽  
Vol 13 (3) ◽  
pp. 287 ◽  
Author(s):  
Nurul Nazlia Jamil ◽  
Sherliza Puat Nelson
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Reporting Quality ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Financial Expertise ◽  
Monitoring Mechanism ◽  
The Impact

Financial reporting quality has been under scrutiny especially after the collapse of major companies. The main objective of this study is to investigate the audit committee’s effectiveness on the financial reporting quality among the Malaysian GLCs following the transformation program. In particular, the study examined the impact of audit committee characteristics (independence, size, frequency of meeting and financial expertise) on earnings management in periods prior to and following the transformation program (2003-2009). As of 31 December 2010, there were 33 public-listed companies categorized as Government-Linked Companies (GLC Transformation Policy, 2010) and there were 20 firms that have complete data that resulted in the total number of firm-year observations to 120 for six years (years 2003-2009).  Results show that the magnitude of earnings management as proxy of financial reporting quality is influenced by the audit committee independence. Agency theory was applied to explain audit committee, as a monitoring mechanism as well as reducing agency costs via gaining competitive advantage in knowledge, skills, and expertise towards financial reporting quality. The study is important as it provides additional knowledge about the impact of audit committees effectiveness on reducing the earnings management, and assist practitioners, policymakers and regulators such as Malaysian Institute of Accountants, Securities Commission and government to determine ways to enhance audit committees effectiveness and improve the financial reporting of GLCs, as well as improving the quality of the accounting profession.     

scholarly journals Determinants of financial reporting quality and its implications on the financial performance of state-owned enterprises (SOEs)

2016 ◽  
Vol 6 (4) ◽  
pp. 521-530
Author(s):  
Evada Dewata ◽  
Hamdy Hadi ◽  
Hadi Jauhari
Keyword(s):  
Financial Performance ◽  
Board Of Directors ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Government Ownership ◽  
Board Of Director ◽  
The Board Of Directors

This research aimed at analyzing the influence of the size of the board of directors, the composition of the independent commissioners, the effectiveness of audit committee and government ownership of the financial reporting quality and its implications on the financial performance of state-owned enterprises. Research population is state-owned enterprises listed on the Indonesia Stock Exchange from 2010-2014. There were 50 companies assigned as the sample of this research by using purposive sampling method. The results showed that partially, the size of the board of director, the composition of the independent commissioners and government ownership did not have the significant influence on financial reporting quality. The effectiveness of audit committee positively and significantly influenced financial reporting quality. The size of the board of directors, the effectiveness of the audit committee and financial reporting quality positively and significantly influenced financial performance. The composition of an independent commissioner and government ownership negatively and significantly influenced financial performance

scholarly journals The associations of board of directors’ characteristics with modified audit opinion

AD-minister ◽  
2020 ◽  
pp. 5-34
Author(s):  
Waddah Kamal Hassan Omer ◽  
Khaled Salmen Aljaaidi ◽  
Mohd ‘Atef Md Yusof ◽  
Mohamad Hisyam Selamat
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Financial Reporting ◽  
Critical Role ◽  
Cross Sectional ◽  
Audit Opinion ◽  
Good Corporate Governance ◽  
Financial Expertise ◽  
The Board Of Directors

The aim of this study is to investigate the association between the characteristics of the board of directors and the likelihood that a company receives a modified audit opinion (as a measure of the quality of companies external financial reporting) in Malaysia. To test our hypotheses, we use the pooled cross-sectional logistic regression analysis for 136 firm-year observations listed on Bursa Malaysia over the period 2009-2011.The evidence we uncover is consistent with the hypotheses that companies with large board size and greater financial expertise of the board of directors are less possible to receive a modified audit opinion. The evidence offers by this study reinforces the listing rules of the Malaysian-Corporate-Governance Code and the requirements of the Bursa Malaysia Corporate-Governance-Guide, which consider the significance of the board of directors as an aspect of good corporate governance to its critical role in the Malaysian financial reporting process.

scholarly journals The impact of ownership structure on financial reporting quality in the east

2017 ◽  
Vol 25 (2) ◽  
pp. 178-197 ◽  
Author(s):  
Qaiser Rafique Yasser ◽  
Abdullah Al Mamun ◽  
Margurite Hook
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Ownership Structure ◽  
Developing Economies ◽  
Reporting Quality ◽  
State Ownership ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Negatively Associated ◽  
The Impact

Purpose This paper aims to focus mainly on the relationship between ownership structure and earnings management of a developed and two developing economies, and is distinct from prior research. Design/methodology/approach Using a sample of firms from three countries (Australia, Malaysia and Pakistan), the detailed ownership evolutions for the period 2011-2013 were observed. Findings Overall, the authors find that in the East, ownership concentration is negatively associated with financial reporting quality. Individual ownership and group ownership were negatively associated with earnings management in Pakistan, however, not in Malaysia where the same were positively associated. Further, the result of this study indicated that state ownership is negatively associated with firm performance. Among the control variables, it was found that larger firms were negatively correlated with financial reporting, while firms with a larger board size and mature in the maneuver were coupled positively with earnings management. Originality/value The results highlight the highly individualized effects of blockholders and the need for research to further understand the mechanisms through which shareholders impact financial reporting quality.

AUDIT COMMITTEE AND AUDIT CHANGE: EMPIRICAL EVIDENCE FROM THE EMERGING MARKET

2012 ◽  
Author(s):  
Zaitul Zaitul
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Practical Implication ◽  
Emerging Market ◽  
Reporting Quality ◽  
Theoretical Implication ◽  
Financial Reporting Quality ◽  
Financial Expertise ◽  
The Relationship

This study aims to investigate the relationship between audit committee and audit change in listed Indonesia Company. We use four variables for audit committee that is independence, size, financial expertise and activity. Besides, this study also uses three control variables (ROA, LEV, and SIZE). By using the Binary Logic Model (BLM) with panel data for 654 observation, we find that all hypotheses are rejected which means that there is no role of audit committee in determining the audit change. However, big and company with the higher leverage is less likely to change audit, firm. This finding has a practical and theoretical implication. For practical implication, regulator or government agent can increase the financial reporting quality by improving the role of audit committee by changing related mechanism.

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