The impact of institutional ownership on the value relevance of accounting information: evidence from Egypt

Purpose This paper aims to examine the value relevance (VR) of accounting information (AI) presented by Egyptian listed non-financial companies. Further, the study investigates the influence of institutional ownership on the value relevance of AI in a developing market, namely, the Egyptian market. Design/methodology/approach The study uses data from 2014 to 2017 with a total of 248 observations and analyses the data using regression analysis. Data are collected from the nonfinancial companies listed on the Egyptian Stock Exchange. Findings The authors found that the AI reported by the Egyptian listed non-financial companies is value relevant. Regarding the influence of institutional ownership, it is found to significantly impact the VR of AI reported by the sample companies. This model investigated the effect of corporate size and financial leverage as controlling variables and found that they have an insignificant influence on the VR of AI. Originality/value The current study findings enrich the literature by enhancing the understanding regarding institutional owners’ impact on corporate value. Further, bringing evidence from an emerging market can have implications for accounting researchers interested in addressing other emerging markets with similar contextual and institutional environments.

The Moderating Effect of Leverage on the Relationship between Corporate Size and Audit Fees: Evidence from Jordanian Manufacturing Companies

The study aimed to examine the moderating role of leverage on the relationship between the size of listed Jordanian manufacturing companies and the audit fees over the period 2016-2020. The study extracted the measures of variables from the annual report of manufacturing companies available on the Amman exchange website, it employs debt ratio to measure leverage, while issued capital and total assets were used to measure the size of the company, several statistics methods such as correlation and multiple linear regression and hierarchical regression were used to analyze the data and test the relations. The results show a statistically significant impact of the size of the manufacturing company measured by capital and total assets on audit fees, furthermore, the leverage variable has modified and increase statistically the positive relationship between the size of the company and audit fees.

Analysis of Factor Affecting Going Concern Audit Opinion on Manufacturing Companies Sub Sector Food and Beverage Listed on the Indonesia Stock Exchange 2015-2019

This research aims to investigate the analysis of variables influencing the audit views on food and beverage manufacturing firms listed on the Indonesia Stock Exchange in 2015-2019. The study is proxied into five variables, namely debt default, corporate financial situation, corporate growth, corporate size, and audit quality. There were 31 food and beverage sub- sector manufacturing firms listed on the Indonesia Stock Exchange in 2015-2019. With purposeful sampling, the research sample became 16 companies with the following criteria: food and beverage sub-sector manufacturers listed on the Indonesia Stock Exchange for the period 2015-2019 and not listed after 1 January 2015, food and beverage sub-sector manufacturers whose financial statements were audited during the period 2015-2019 and an independent auditor was appointed. The research technique utilizes a quantitative way to analyze logistic regression. The findings revealed that a continuing financial situation influenced audit opinion, whereas debt default, business growth, company size, and audit quality had no ongoing impact on audit opinion. Simultaneously, debt default, financial situation, growth, size, quality have a major continuous impact on the audit opinion.

The Role of Dividend Policy in Inventing the Effect of Accounting Profit, Cash Flow, Operation and Corporate Size on the Price of Closing Stock

This study aims to determine the effect of accounting profit, operating cash flow and company size on the closing price of shares through dividend policy on consumer goods industry companies on the Indonesia Stock Exchange. This research uses quantitative methods and types of explanatory research, with 2016-2018 observation years in 17 company samples. The results showed (1) Accounting profit and operating cash flow had a positive and significant effect on dividend policy, while the size of the company had no influence on dividend policy. (2) Accounting profit and operating cash flow have no effect on the closing price of shares, while the size of the company has a positive and significant effect on the closing price of shares. (3) Dividend policy has a positive and significant effect on the closing price of shares. (4) There is no indirect effect of dividend policy in mediating accounting profit and operating cash flow on the closing price of shares, but there is an indirect effect of dividend policy in mediating company size on the closing price of shares

Impact of key audit matters (KAMs) reporting on audit quality: evidence from Thailand

PurposeThe study aims to examine the relationship between key audit matters (KAMs) reporting and audit quality of companies listed on the Stock Exchange of Thailand (SET).Design/methodology/approachCorporate annual reports from 2016 to 2019 were used as samples, with 100 companies and their 400 annual reports. The word count from KAMs paragraph in the audit report was used to assess KAMs reporting, while the Modified Jones Model was used to assess audit quality. In addition, external audit characteristics were used as variables in this study. The data were analyzed using descriptive analysis, correlation matrix and panel multiple analysis.FindingsAs the results, there was a positive significant relationship between KAMs reporting and audit quality. Moreover, the study found the impact of audit tenure, auditor firm size, audit independence, corporate size and corporate risk on audit quality.Research limitations/implicationsThe number of samples as well as the proxies of KAMs reporting and audit quality are listed as limitations of this study.Practical implicationsInvestors can use KAMs reporting as important information to their decision-making because KAMs information is associated with a high audit quality.Originality/valueThe study demonstrates that communication theory can be used to describe the positive impact of the new audit reporting on audit quality in an emerging country like Thailand as well as in developed countries.

The firm growth-cash flow sensitivity: do financial constraints matter?

PurposeThe paper examines the differential effect of liquidity constraints on corporate growth using unbalanced panel data for 457 Pakistani firms over the period 2010–2017.Design/methodology/approachThe study uses the probability of a financial unconstrained index constructed by estimating the endogenous regression model. This approach provides a time-varying measure of financial position for all firm-year observations and takes into account the different degrees of liquidity constraints that a company faces in attaining funds from external markets. It is derived from a multivariate selection equation that simultaneously accounts for all-important features of the underlying company identified in the literature. The cash flow variable has then interacted with various groups of dummy variables for financial constraint, which allows the coefficient of cash flow to vary across firm-year observations in the different liquidity constraint categories. The two-step system-GMM estimator is applied to estimate the main empirical model.FindingsThe results of the study provide evidence of the heterogeneity in firms' growth sensitivity to internal funds, depending on the degree of liquidity constraints. Financing growth through internal funds is found to be essential for both liquidity unconstrained and constrained corporates. However, it is observed that the coefficient of cash flow is greater for firms that do not have access to external financing and it eventually decreases with reductions in the magnitude of liquidity constraints, making the least constrained corporates' growth less responsive to internal funds. The results further indicate that smaller and younger firms show higher responsiveness of growth to internal funds. This finding is mainly attributed to financial market imperfections that make external funding difficult for them.Practical implicationsThe results suggest that financially constrained firms should expand their corporate size more than the magnitude of positive income shocks they encounter. The study also suggests important policy implications for liquidity-constrained firms to carefully concentrate on their financing strategies to enhance their growth. By improving the corporate's capacity for production, corporates can achieve a faster effect of a potential positive income shock on their growth.Originality/valueThis paper contributes to the literature by constructing a financial constraint index by running the endogenous regression model. It also contributes by investigating the differential impact of credit constraints on firms' growth in Pakistan and how corporate size and age affect firm growth when financial constraints and investment opportunities are controlled.

Ownership Concentration, Corporate Liquidity, and Dividend Payment Policy: Evidence from Indonesian Financial Industries

The main objective of this research is to analyze the effect of ownership concentration and corporate liquidity on dividend payment policy in the Indonesian financial industry. Dividend payment is measured using dividend pay-out ratio on measuring dividend payment. Corporate ownership concentration is measured using the number of shares held by legal individual investors and large block shareholders. Ownership concentration is divided into three categories, which are inside shareholders, stable shareholders, and market shareholders. Corporate liquidity is measured by corporate profit, defined by retained earnings/total assets and retained earnings/total equity, corporate leverage (total liabilities/total assets), and corporate size (log normal total assets). We apply data panel regression and the robust least square method. Based on the robust least square method of testing data panel regression, we find there is a relationship between insider shareholder, market shareholder, and dividend payment policy. In contrast, there is no relationship between stable shareholder and dividend payment policy. We also found a relationship between corporate profit, which variable is retained earnings/total assets, corporate leverage, and corporate size, and dividend payment policy. These results lead to the conclusion that dividend payments increase when ownership by inside shareholders decreases, and that when ownership by market shareholders increase corporate profit will also increase, and corporate leverageand corporate size decreases.

Pengaruh Good Corporate Governance, Modal Intelektual, Ukuran Perusahaan terhadap Kinerja Keuangan pada Perusahaan Makanan

The purpose of the study is to test the impact of good corporate governance, intellectual capital, and corporate size on food and beverage performance. This study sample is a food and beverage company registered in the Indonesian stock exchange. The analysis used in this study is linked to linear regression analysis. Studies show that good corporate governance consists of a few indicators, these indictments show that the size of the board of commissioners affects financial performance (roa), independent commissioners have no effect on financial performance (roa), and independent auditing committees affect financial performance (roa) and institutional ownership. No influence on financial performance (roa), the manager's ownership has no effect on financial performance (roa), and the committee's size also affects financial performance (roa). Apart from good company governance indicators, intellectual capital has no effect on financial performance (roa), and the company's size also affects financial performance.

Application of Big Data Complexity Analysis Hedging Operation of Derivative Financial Products

This study is based on the situation of Taiwan listed companies as derivative financial products from 2015 to 2017, analyzing the relationship between the hedging of derivative financial products and characteristics of enterprises and the factors that affect the hedging decision-making of companies. It is found that even after the announcement of Taiwan’s No. 34 and No. 36 bulletins, there are still some problems that are needed to improve in the disclosure of derivative financial product investment information by Taiwan’s listed companies, at least in the disclosure of the reasons for this conduct which is still insufficient. In this study, two-stage regression analysis method is applied to empirical analysis, and it is found that hedging activities are related to corporate characteristics, such as expected financial crisis costs, corporate size, equity issues, growth investment opportunities, and information asymmetry. In the investment of derivative financial products, enterprises should evaluate their own financial characteristics as a reference for the risk avoidance decision. At the same time, it is necessary to investigate different natures of hedging tools used in appropriate risk categories, so as to fully achieve the hedging effect and maximize the hedging benefits. This study also found that companies with higher growth investment opportunities, larger size, and higher financial crisis costs will tend to use derivative financial products for hedging. As for the impact of other industries, it is found that the electronic and electrical machinery industries are more active than other industries in hedging behaviors of undertaking derivative financial products’ transaction.

Robust Characterization of Multidimensional Scaling Relations between Size Measures for Business Firms

Although the sizes of business firms have been a subject of intensive research, the definition of a “size” of a firm remains unclear. In this study, we empirically characterize in detail the scaling relations between size measures of business firms, analyzing them based on allometric scaling. Using a large dataset of Japanese firms that tracked approximately one million firms annually for two decades (1994–2015), we examined up to the trivariate relations between corporate size measures: annual sales, capital stock, total assets, and numbers of employees and trading partners. The data were examined using a multivariate generalization of a previously proposed method for analyzing bivariate scalings. We found that relations between measures other than the capital stock are marked by allometric scaling relations. Power–law exponents for scalings and distributions of multiple firm size measures were mostly robust throughout the years but had fluctuations that appeared to correlate with national economic conditions. We established theoretical relations between the exponents. We expect these results to allow direct estimation of the effects of using alternative size measures of business firms in regression analyses, to facilitate the modeling of firms, and to enhance the current theoretical understanding of complex systems.