Earnings Opacity and Corporate Governance for Chinese Listed Firms: The Role of the Board and External Auditors

2018 ◽  
Author(s):  
Wing Him Yeung ◽  
Camillo Lento
Keyword(s):  
Corporate Governance ◽  
Listed Firms ◽  
External Auditors

Earnings opacity and corporate governance for Chinese listed firms: the role of the board and external auditors

2020 ◽  
Vol 28 (4) ◽  
pp. 487-515 ◽  
Author(s):  
Wing Him Yeung ◽  
Camillo Lento
Keyword(s):  
Corporate Governance ◽  
Reporting Quality ◽  
Listed Companies ◽  
Content Type ◽  
Listed Firms ◽  
External Auditors ◽  
Corporate Governance Mechanisms ◽  
Chinese Listed Companies ◽  
The Board Of Directors

PurposeThe purpose of this paper is to investigate the relationship between corporate governance and earnings opacity in China.Design/methodology/approachTwo corporate governance mechanisms form the basis of the analysis: 1) the board of directors and 2) the external audit function. OLS regression analysis is employed on a large sample from 2000 to 2014 with 20,235 firm-year observations.FindingsCorporate governance is found to be associated with reduced levels of earnings opacity for Chinese listed companies. Furthermore, the association between corporate governance and reduced levels of earnings opacity strengthened after the implementation of various key reforms.Practical implicationsChinese regulators are advised to proceed with caution as not all Western approaches to corporate governance are transferrable to the Chinese setting.Originality/valueThis study contributes to the literature by analyzing broad latent constructs of corporate governance in addition to individual observable dimensions in order to reveal that various key reforms have been successful in strengthening the link between governance and reporting quality for Chinese listed companies.

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

2020 ◽  
Vol 4 (15) ◽  
Author(s):  
Lamis Jameel Banasser, Maha Faisal Alsayegh
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Auditors ◽  
External Auditors ◽  
Riyadh City ◽  
Creative Accounting ◽  
Telecommunications Sector

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.

Determinants of voluntary formation of risk management committees

2014 ◽  
Vol 29 (7) ◽  
pp. 649-671 ◽  
Author(s):  
Nkoko Blessy Sekome ◽  
Tesfaye Taddesse Lemma
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Emerging Economy ◽  
Board Structure ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

Purpose – The aim of this paper is to examine the nexus between firm-specific attributes and a company’s decision to setup a separate risk management committee (RMC) as a sub-committee of the board within the context of an emerging economy, South Africa. Design/methodology/approach – The authors analyse data extracted from audited annual financial reports of 181 non-financial firms listed on the Johannesburg Securities Exchange (JSE) by using logistic regression technique. Findings – The results show a strong positive relationship between the existence of a separate RMC and board independence, board size, firm size and industry type. However, the authors fail to find support for the hypotheses that independent board chairman, auditor reputation, reporting risk and financial leverage have an influence on a firm’s decision to establish RMC as a separately standing committee in the board structure. The findings signify the role of costs associated with information asymmetry, agency, upkeep of a standalone RMC, damage to the reputation of directors and industry-specific idiosyncrasies on a firm’s decision to form a separate RMC. Research limitations/implications – As in most empirical studies, this study focuses on listed firms. Nonetheless, future studies that focus on non-listed firms could add additional insights to the literature. Investigating the role of firm-specific governance attributes other than those considered in the present study (e.g. gender of directors, ownership structure, etc.) could further enhance the understanding of antecedents of risk-management practices. Practical implications – The findings have practical implications for the investment community in assessing the quality of risk management practices of companies listed on the JSE. Furthermore, the results provide insights that are potentially useful to the King Committee and other corporate governance regulators in South Africa in their effort to improve corporate governance practices. Originality/value – The present study focuses on firms drawn from an emerging economy which has profound economic, institutional, political and cultural differences compared to advanced economies, which have received a disproportionately higher share of attention in prior studies. Thus, the study contributes additional insights to the literature on corporate risk management from the perspective of an emerging economy.

scholarly journals The role of the external auditor in corporate governance: The case of companies listed in the NYSE Euronext Lisbon

2019 ◽  
Vol 8 (4) ◽  
pp. 38-51 ◽  
Author(s):  
José Manuel Bernardo Vaz Ferreira
Keyword(s):  
Corporate Governance ◽  
Multiple Regression ◽  
Direct Relationship ◽  
Logistic Models ◽  
Agency Problems ◽  
Securities Market ◽  
External Auditors ◽  
External Auditor ◽  
Economic Crimes

This study investigates the effects of the presence of the external auditor on corporate governance in Portugal, in the way listed companies are managed, based on the verification of compliance with the corporate governance regulations of the Securities Market Commission, as well as the transparency of information and the reduction of agency problems, fraud and economic crimes. By comparing government reports of companies listed on NYSE Euronext Lisbon, during several periods and with surveys conducted in the 1st half of 2013 in Portugal to the external auditors responsible for the majority of the legal certification of accounts of companies during 2007 to 2011, a significant direct relationship in the fulfillment of the recommendations of corporate governance and its verification by the external auditor is concluded. Based on multiple regression and multinomial logistic models, it is concluded that a greater involvement of the ROC in complying with corporate governance recommendations, allows for greater transparency of information and a reduction of agency problems, fraud and economic crimes

scholarly journals Impact of corporate governance on financial disclosures: Evidence from India

2014 ◽  
Vol 12 (1) ◽  
pp. 874-889 ◽  
Author(s):  
Mehul Raithatha ◽  
Varadraj Bapat
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Board Independence ◽  
Board Structure ◽  
Board Size ◽  
Cross Sectional ◽  
Listed Firms ◽  
Disclosure Requirements ◽  
Financial Disclosures

The paper aims at identifying impact of corporate governance variables i.e. board structure (board size, board independence, board activity and board busyness) and ownership structure (foreign promoters holding, institutional shareholding and CEO duality) on financial disclosures made by the Indian firms. Using cross sectional data of 325 listed firms for the financial year 2009-10, we compute financial disclosure score (using 171 checklist points) based on disclosure requirements of accounting standards. We find average disclosure score of 73%, maximum and minimum being 100% and 46% respectively. Our finding support agency theory in terms of monitoring role of board since board size is found to be significant however we do not find any influence of board independence on the disclosures. The study also supports resource dependency theory in terms of outside directorship which might provide exposure to different corporate environment, brings diverse perspectives and knowledge to the directors and this in turn leads to improved disclosures. We also support the notion that having foreign promoter shareholding improves disclosures

Corporate governance and information technology in fraud prevention and detection

2016 ◽  
Vol 31 (6/7) ◽  
pp. 589-628 ◽  
Author(s):  
Sawsan Saadi Halbouni ◽  
Nada Obeid ◽  
Abeer Garbou
Keyword(s):  
Information Technology ◽  
Corporate Governance ◽  
Boards Of Directors ◽  
Senior Management ◽  
Fraud Prevention ◽  
Content Type ◽  
External Auditors ◽  
Detection Techniques ◽  
Significant Difference

Purpose This paper aims to investigate the role of corporate governance and information technology in fraud prevention and detection within the United Arab Emirates (UAE). Design/methodology/approach This study uses a survey of financial accountants and internal and external auditors to assess their perceptions of the effectiveness of IT and corporate governance as measured in terms of the audit committee’s effectiveness, internal audit functions, external audit functions, culture of honesty and employee training programmes in preventing and detecting fraud in the UAE. Findings The results indicate that corporate governance has a moderate role in preventing and detecting fraud in the UAE and that IT has the same role as traditional fraud prevention and detection techniques. The results also show no significant difference between internal and external auditors in their use of technological and traditional techniques during the course of audits. Research limitations/implications The findings suggest that the senior management and boards of directors must better understand the importance of their oversight function. The finding that a culture of honesty has a low positive impact on fraud prevention and detection in the UAE indicates that chief executive officers and boards of directors must make more efforts to set the “tone at the top” to improve the corporate environment in terms of integrity and ethics, among other factors. Furthermore, as IT and traditional techniques provide the same function, senior management and boards of directors must be alerted to the importance of developing systematic approaches to fraud investigation that involve greater reliance on technological approaches. Practical implications The moderate role of corporate governance suggests that senior management and boards of directors must better understand the importance of their oversight function to meet their obligations and fiduciary responsibilities to stakeholders. Furthermore, greater adoption of IT to detect and prevent fraud contributes to developing a systematic approach to fraud investigation, capable of identifying unusual activity using effective software. Originality/value This study contributes to the literature on the role of corporate governance and IT in preventing and detecting fraud, particularly for Middle Eastern countries and other emerging nations. The study may provide insights to academics and practitioners in the UAE and their international counterparts.

scholarly journals Institutional Ownership and Firm Performance under Stakeholder-Oriented Corporate Governance

2020 ◽  
Vol 12 (3) ◽  
pp. 1021 ◽  
Author(s):  
Hideaki Sakawa ◽  
Naoki Watanabel
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Institutional Investors ◽  
Institutional Ownership ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Institutional Shareholders ◽  
Japanese Corporations ◽  
Oriented System

This study aimed to reveal the role of institutional investors with shareholder-oriented scopes in a stakeholder-oriented economy such as Japan. With financial globalization, the increasing number of institutional shareholders in Japanese corporations enables us to investigate whether their shareholder-oriented perspectives are conducive to taking on effective monitoring roles under stakeholder-oriented corporate governance. This study’s sample included large listed firms of the TOPIX 500 in Japan during 2010-2016. Using 2924 firm-year observations, the effect of institutional investors on firm performance was analyzed to test the role of institutional investors in stakeholder-oriented corporate governance. Our study showed that the monitoring role of institutional shareholders, or foreign shareholders, functions effectively in Japanese corporations. In addition, we showed that the monitoring roles of these are expected to strengthen firms through higher growth opportunities. These results implied that institutional shareholders contribute to enhancing sustainable firm performance and constructing sustainable corporate governance mechanisms in a stakeholder-oriented system.

scholarly journals Voluntary social performance disclosure and firm profitability of South African listed firms: Examining the complementary role of board independence and managerial ownership

2021 ◽  
Vol 24 (1) ◽  
Author(s):  
Frank Sampong ◽  
Na Song ◽  
Gilbert K. Amoako ◽  
Kingsley O. Boahene
Keyword(s):  
Corporate Governance ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Executive Directors ◽  
Listed Firms ◽  
Complementary Role ◽  
Firm Profitability ◽  
Corporate Social

Background: There is growing literature promoting corporate governance mechanisms as important elements that could mitigate the inconclusive findings within the corporate social performance and firm profitability research. A key theoretical assumption within the extant literature that provides support for this proposition is that corporate social performance and firm profitability are organisational outcomes in the presence of good corporate governance.Aim: Firstly, the aim is to re-investigate voluntary social performance disclosure (SPD) and long-term profitability association from the perspective of international standards, using the Global Reporting Initiative G3.1 guidelines. Secondly, to examine the joint moderating effect of board independence and managerial ownership (MO) on the voluntary SPD and profitability nexus.Setting: The South Africa institutional setting, where recent corporate governance regimes require firms to voluntarily make corporate governance related disclosures on both shareholder-and stakeholder-related information is used as the study context.Method: Utilising manually extracted data of listed firms, over the period 2010 to 2015, the generalised least square regression and seemingly unrelated regression (with a 1-year lag as the main independent variable) are used to examine the stated hypotheses.Results: We found a positive association between voluntary SPD and long-term profitability. We also found that the presence of non-executive directors positively moderates the association between voluntary SPD and long-term profitability. Thirdly, the proportion of MO significantly positively moderates the association between voluntary SPD and long-term profitability. Lastly, the complementary role of the presence of non-executive directors and the proportion of MO significantly positively moderates the association between voluntary SPD and long-term profitability.Conclusion: This study finds support for scholarly theoretical arguments that organisational outcomes are largely possible in the presence of good corporate governance, which has a long-term implication for firms’ shareholder wealth maximisation. This study contributes to the ongoing research examining the notion of substitutive versus complementary effects of governance mechanisms, and a growing research literature on corporate social responsibility (CSR) disclosure from the perspective of international standardisation. This study therefore makes far-reaching contributions to the corporate governance and social responsibility literature in an African context.

Analysis of the Role of Corporate Governance on Listed Firm’s Capital Structure: The East African Stock Markets Perspective

2019 ◽  
Vol 9 (3) ◽  
pp. 143
Author(s):  
Erick Lusekelo Mwambuli
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Stock Markets ◽  
Debt Ratio ◽  
East African ◽  
African Region ◽  
Listed Firms ◽  
Governance Practices ◽  
East African Region

This paper examine the role of corporate governance on listed firm’s capital structure decisions in developing economies, East African stock markets. To achieve the objective of this paper, we used a strongly balanced panel dataset of 320 observations (i.e. a sample of 32 non-financial listed firms in East African region from 2006-2015. Measures for capital structure decisions were short term debt ratio (STDR),long term debt ratio (LTDR) and total debt ratio (TDR) as dependent variables and explanatory (independent) variable was corporate governance practices measured by researcher-constructed index consisting of 28 corporate governance provisions ;thus the corporate governance practices index (CGPI). Furthermore, the effects of control variable such as firm size (SIZ), the level of economic development (GDP) and industry dummies were also examined. The panel corrected standard errors (PCSEs) regression model was employed for corporate governance practices and capital structure decisions to analyze the data. Our results indicate a statistically significant negative effect of corporate governance practices on capital structure decisions at 5% significance level. Our paper contributes to both literature and the practical implications, because our paper provides a first insight of the corporate governance practices and its effects on capital structure decisions for the East African regional stock markets. The paper recommends to securities markets regulatory authorities in East African region such as East African member states securities regulatory authority (EASRA) and their respective countries securities markets regulatory authorities to stimulates new efforts towards better corporate governance practices to listed firms in the regional bloc due to its statistically significant effects on capital structure decisions and future study can be extended after considering external corporate governance mechanisms.

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