Related party transactions and earnings quality: Moderating effect of corporate governance

2012 ◽  
Author(s):  
Muhamad Shfri Daie ◽  
Suhaily Hasnan
Keyword(s):  
Corporate Governance ◽  
Earnings Quality ◽  
Moderating Effect ◽  
Related Party Transactions

Independent Directors' Tenure, Expropriation, Related Party Transactions, and Firm Value

2022 ◽  
pp. 369-394
Author(s):  
Chee Yoong Liew ◽  
S. Susela Devi
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Moderating Effect ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Policy Makers ◽  
Related Party Transactions ◽  
Financial Valuation ◽  
Agency Conflict ◽  
The Relationship

This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally.Keywords: Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporations, Emerging Markets

scholarly journals Moderating effect of managerial ownership on accounting conservatism and quality of earnings of listed industrial firms in Nigeria

2020 ◽  
Vol 3 (2) ◽  
pp. 101-117
Author(s):  
Godwin Oyedokun ◽  
◽  
Tanimu Usman ◽  
Alex Osuza ◽  
◽  
...  
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Earnings Quality ◽  
Moderating Effect ◽  
Accounting Conservatism ◽  
Managerial Ownership ◽  
Industrial Firms ◽  
Ex Post ◽  
Ex Post Facto

This study adopts a positivist view to the examined moderating effect of managerial ownership, accounting conservatism, and quality of earnings of listed industrial firms in Nigeria from 2009 to 2018. The study employed ex-post facto research design and panel multiple regression for the analysis. The population of the study comprised of 13 listed industrial firms in Nigeria as at 31st December 2018. Accounting conservatism was measured using Beaver and Ryan's (2000) model while the quality of earnings as measured by the modified Jones model. Managerial ownership was measured by the proportion of managerial ownership in the firm. It was discovered that an increase in accounting conservatism of industrial firms will lead to a decrease in quality of earnings, but moderated accounting conservatism has no statistically significant effect on the quality of earnings of industrial firms in Nigeria. The study recommends that shareholders of industrial firms in Nigeria should encourage accounting conservatism because it will reduce earnings quality practice by the management thereby bringing out the true picture of the financial activities of the organization. This will encourage more investment in the firm by potential and existing shareholders. Keywords: Accounting conservatism, Corporate governance, Financial reporting, Managerial ownership, Quality of earnings

Independent Directors' Tenure, Expropriation, Related Party Transactions, and Firm Value

2020 ◽  
pp. 182-207
Author(s):  
Chee Yoong Liew ◽  
S. Susela Devi
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Moderating Effect ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Policy Makers ◽  
Related Party Transactions ◽  
Financial Valuation ◽  
Agency Conflict ◽  
The Relationship

This chapter analyses the relationship between related party transactions (RPT) and firm value and whether independent directors' tenure (IDT) strengthens or weakens this relationship. Further, it examines ownership concentration's role on this moderating effect of IDT in Malaysian family and non-family corporations. It is found that that IDT weakens the relationship between RPT and firm value. However, ownership concentration strengthens this moderating effect of IDT. Interestingly, family corporations are more likely to show a stronger impact of ownership concentration which we allude to concerns of maintaining reputation. The research results remain after controlling for technology corporations. The findings' have important implications for policy makers, practitioners and regulators, especially in emerging economies globally.Keywords: Agency Conflict, Corporate Financial Valuation, Independent Directors' Term in the Office, Corporate Governance, Family Corporations, Emerging Markets

How firms' performance mediates the relationship between corporate governance quality and earnings quality?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammed Adel Elzahaby
Keyword(s):  
Corporate Governance ◽  
Analytical Model ◽  
Performance Measures ◽  
Earnings Quality ◽  
Direct Path ◽  
Content Type ◽  
Indirect Path ◽  
Governance Quality ◽  
Financial Performance Measures ◽  
Corporate Governance Quality

PurposeThe purpose of this study is to propose an analytical model that investigates both a direct path between corporate governance quality and earnings quality and an indirect path, in which firms' performance is a mediating variable that is influenced by corporate governance quality and that, in turn, influences earnings quality.Design/methodology/approachThe study employs a structural equation modelling (SEM), to a sample of Egyptian listed firms during 2011–2017, to test the proposed analytical model and to determine the relative importance of both the direct and indirect paths.FindingsThe findings show a statistically significant evidence of both a direct path from corporate governance quality to earnings quality, and an indirect path that is mediated by firms' performance, suggesting that both corporate governance quality and performance have a complementary effect on earnings quality. However, the weight of the evidence favouring the direct path is more important in case of accounting-based performance measures; and the weight of the evidence favouring the indirect path is more important in case of market-based performance measures.Research limitations/implicationsThe current study has some limitations. First, the study focuses specifically on one proxy for measuring earnings quality which is the absolute value of discretionary accruals. Other proxies of earnings quality could be examined in future research, such as income smoothing, earnings persistence and timely loss recognition. Another limitation is that only financial performance measures were examined, namely, return on assets, return on equity, price-to-earnings ratio and market-to-book value. Notwithstanding, non-financial performance measures could be investigated in future studies, such as balanced scorecard (BSC). Furthermore, considering cultural, political and legislative differences among countries, the results may not be generalised outside the scope of the current sample (i.e. Egyptian listed firms).Practical implicationsThe implications of the findings for both theory and practice are discussed.Originality/valueThis study is distinguished by validating an analytical model that has been overlooked by prior studies. Moreover, it provides a new constructed index for measuring corporate governance quality. Furthermore, it uses a new sophisticated statistical technique, which is SEM, for testing the proposed model.

Audit committee characteristics and the moderating effect of Malaysian code of corporate governance on IPO liquidity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amal Mohammed Al-Masawa ◽  
Rasidah Mohd-Rashid ◽  
Hamdan Amer Al-Jaifi ◽  
Shaker Dahan Al-Duais
Keyword(s):  
Corporate Governance ◽  
Initial Public Offerings ◽  
Audit Committee ◽  
Ordinary Least Squares ◽  
Moderating Effect ◽  
Least Squares Regression ◽  
Content Type ◽  
Code Of Corporate Governance ◽  
The Impact ◽  
The Relationship

Purpose This study aims to investigate the link between audit committee characteristics and the liquidity of initial public offerings (IPOs) in Malaysia, which is an emerging economy in Southeast Asia. Another purpose of this study is to examine the moderating effect of the revised Malaysian code of corporate governance (MCCG) on the link between audit committee characteristics and IPO liquidity. Design/methodology/approach The final sample consists of 304 Malaysian IPOs listed in 2002–2017. This study uses ordinary least squares regression method to analyse the data. To confirm this study’s findings, a hierarchical or four-stage regression analysis is used to compare the t-values of the main and moderate regression models. Findings The findings show that audit committee characteristics (size and director independence) have a positive and significant relationship with IPO liquidity. Also, the revised MCCG positively moderates the relationship between audit committee characteristics and IPO liquidity. Research limitations/implications This study’s findings indicate that companies with higher audit committee independence have a more effective monitoring mechanism that mitigates information asymmetry, thus reducing adverse selection issues during share trading. Practical implications Policymakers could use the results of this study in developing policies for IPO liquidity improvements. Additionally, the findings are useful for traders and investors in their investment decision-making. For companies, the findings highlight the crucial role of the audit committee as part of the control system that monitors corporate governance. Originality/value To the authors’ knowledge, this work is a pioneering study in the context of a developing country, specifically Malaysia that investigates the impact of audit committee characteristics on IPO liquidity. Previously, the link between corporate governance and IPO liquidity had not been investigated in Malaysia. This study also contributes to the IPO literature by providing empirical evidence regarding the moderating effect of the revised MCCG on the relationship between audit committee characteristics and IPO liquidity.

Do board directors and good corporate governance improve integrated reporting quality? The moderating effect of CSR: an empirical analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jamel Chouaibi ◽  
Saida Boulhouchet ◽  
Raghad Almallah ◽  
Yamina Chouaibi
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Moderating Effect ◽  
Integrated Reporting ◽  
Board Diversity ◽  
Content Type ◽  
Board Characteristics ◽  
Good Corporate Governance ◽  
Corporate Social

PurposeThis paper targets to shed light on the relationship between board characteristics, good corporate governance and the integrated reporting quality (IRQ) and even if this relationship is moderated by the corporate social responsibility.Design/methodology/approachData from a sample of 185 European firms selected from STOXX 600 Index between 2010 and 2019 are used to test the model using panel data and multiple regression. This paper is motivated by using panel data estimated feasible generalized least squares method. A multiple regression model is used to analyze the moderating effect of the corporate social responsibility on the association between board characteristics, good corporate governance and the IRQ.FindingsConsistent with the expectations, the results showed that there is a positive relationship between board independence, board diversity, good corporate governance and IRQ. Furthermore, the findings suggest that moderating effect positively affects the relationship between the board characteristics, good corporate governance and IRQ.Practical implicationsThe results of this study have an impact on policymakers. The presence of women and independent members of the board should be encouraged. This has a positive effect on the availability of high-quality information, able to drive investment levels and stakeholder participation.Originality/valueThis study supports the existing literature. First, it expands the scientific debate on the topic of integrated reporting (IR). Second, it extends the scope of agency theory, which is rarely used to explain IR-related phenomena. This study is one of the first to examine the moderating effect of corporate social responsibility on the association between a set of governance characteristics (i.e. Board independence and board diversity) and integrated reporting adoption.

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