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Kim Ittonen, Emma-Riikka Myllymäki and Per Christen Tronnes
This paper focuses on bank audit committees and examines whether audit committee members who are former auditors are associated with the acquisition of audit and non-audit…
Abstract
Purpose
This paper focuses on bank audit committees and examines whether audit committee members who are former auditors are associated with the acquisition of audit and non-audit services from their former employers.
Design/methodology/approach
The study empirically examines a sample of large banks that are included in the S&P Composite 1500.
Findings
The paper reports significantly lower audit fees and a higher proportion of non-audit fees to total fees when the audit committee chair is an alumnus of the incumbent audit firm. Moreover, additional analysis reveals that these findings are stronger for banks with more earnings management.
Research limitations/implications
Overall, the findings indicate that audit firms might consider banks using their alumni as audit committee chairs to be less risky or easier to audit, thus requiring relatively less effort from the auditors. The reduced effort required to audit clients with audit firm alumni on their audit committees then has the effect of reducing the audit fees charged. Alternatively, their auditing experience and cognitive proximity might influence the assessment of the need for auditing or the ability to negotiate lower audit fees on the part of audit firm alumni.
Originality/value
This paper provides empirical evidence of the association between audit firm alumni in influential positions on an audit committee and fees paid to those audit firms in the banking industry. The findings contribute to the literature by suggesting that banks with affiliated former auditors chairing their audit committees not only have significantly lower audit fees but also a higher proportion is spent on non-audit services.
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Fabrizia Sarto and Sara Saggese
The study empirically investigates whether the board of directors' expertise in the focal firm's industry has implications for innovation input. Additionally, it explores how this…
Abstract
Purpose
The study empirically investigates whether the board of directors' expertise in the focal firm's industry has implications for innovation input. Additionally, it explores how this relationship is shaped by the CEO's educational level and background in the technology area.
Design/methodology/approach
The article tests the hypothesized relationships through the Arellano–Bond generalized method of moment estimators, proxying innovation input by R&D to total sales. Moreover, it analyses a sample of privately-held Italian medium and large high-tech companies observed over four years by relying on a unique hand-collected dataset.
Findings
The research documents an inverted U-shaped relationship between board industry expertise and innovation input and shows that such curvilinear effect is moderated by the CEO's educational level and technology background. Specifically, while the curvilinear slope is less steep for highly educated CEO, it becomes steeper in the presence of technology trained CEO.
Practical implications
The paper recommends how to shape the board human capital as a meaningful driver of board effectiveness and innovation. Additionally, it calls the managerial attention towards the interaction and the interplay between board industry expertise and CEO education as able to influence the above-mentioned outcome.
Originality/value
While previous studies have focused on the linear and positive effect of board industry expertise on innovation, this research advances current knowledge in innovation management literature by testing the presence of a curvilinear relationship. Moreover, by exploring the moderating effect of CEO education, the paper provides a comprehensive picture on the interplay among board industry expertise, CEO educational training and innovation input.
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Rifat Fariha, Md. Mukarrom Hossain and Ratan Ghosh
This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of…
Abstract
Purpose
This study is designed and directed to analyze the effect of board characteristics and audit committee attributes on the firm performance of publicly listed commercial banks of Bangladesh.
Design/methodology/approach
Thirty publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as sample for this study. Data have been collected from annual reports between 2011 and 2017 of the assessed banks. Pooled OLS model has been used for running regression model of this study.
Findings
Board independence has a negative and significant relationship with ROA and Tobin's Q. However, Board Independence has a positive and significant relationship with Stock Return. On the other hand, Board Diversity has a negative and significant relationship with ROA and ROE, which implies inefficiency of diversified board members in the context of Bangladesh. Family duality has a positive and significant relationship with ROA and a negative and significant relationship with Stock return. Board Meeting has a positive and significant relationship with ROA. Audit Committee Size has a negative and significant relationship with Tobins' Q. Independence of audit committee chairman has a negative and significant relationship with Tobin's Q and Stock Returns. Presence of non-executive directors and number of audit meetings have no significant relationship with any of the predicted variables.
Research limitations/implications
Among all variables of the board characteristics, role of independent directors and participation of female directors have conflicting results in this study. This has raised a question about the fair appointment independent directors and their objective view on the board. Female directors' role is not convincing in the context of Bangladesh as most of the commercial banks are family-owned. Policymakers can tighten and supervise the appointment of independent directors to ensure good governance in the banking sector. Moreover, role of audit committee and independence of audit committee chairman have generated conflicting results in terms of market-based performance measure.
Originality/value
Banking sector of Bangladesh experiences huge corruption in the form of excessive NPLs and poor management quality which results in low profit for the firm. This study has explored the problems of management quality and flaws of audit committee which is hampering overall growth of banking industry. Improvement of independent directors' appointment and audit committee formation and reporting will certainly help banking industry of Bangladesh to improve overall performance.
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Monica Stolt Pedersen, Anne Landheim, Merete Møller and Lars Lien
Audit and feedback (A&F) often underlie implementation projects, described as a circular process; i.e. an A&F cycle. They are widely used, but effect varies with no apparent…
Abstract
Purpose
Audit and feedback (A&F) often underlie implementation projects, described as a circular process; i.e. an A&F cycle. They are widely used, but effect varies with no apparent explanation. We need to understand how A&F work in real-life situations. The purpose of this paper, therefore, is to describe and explore mental healthcare full A&F cycle experiences.
Design/methodology/approach
This is a naturalistic qualitative study that uses four focus groups and qualitative content analysis.
Findings
Staff accepted the initial A&F stages, perceiving it to enhance awareness and reassure them about good practice. They were willing to participate in the full cycle and implement changes, but experienced poor follow-up and prioritization, not giving them a chance to own to the process. An important finding is the need for an A&F cycle facilitator.
Practical implications
Research teams cannot be expected to be involved in implementing clinical care. Guidelines will keep being produced to improve service quality and will be expected to be practiced. This study gives insights into planning and tailoring A&F cycles.
Originality/value
Tools to ease implementation are not enough, and the key seems to lie with facilitating a process using A&F. This study underscores leadership, designated responsibility and facilitation throughout a full audit cycle.
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Tamara Volodina, Giuseppe Grossi and Veronika Vakulenko
The purpose of this paper is to explore how internal auditors’ (IAs) roles have changed because of the diffusion of neoliberal ideologies in the Ukrainian public sector.
Abstract
Purpose
The purpose of this paper is to explore how internal auditors’ (IAs) roles have changed because of the diffusion of neoliberal ideologies in the Ukrainian public sector.
Design/methodology/approach
A qualitative methodological approach was applied. Data were collected from 29 semi-structured interviews with public sector auditors in Ukraine’s central government; secondary data analysis was also performed.
Findings
IAs’ role in Ukraine’s central government has changed significantly, with reforms attempting to move to performance auditing. Consequently, Ukrainian central government IAs appeared in the multi-expectation situation, due to the division of the role senders into two different areas. On one hand, IAs are expected to perform new roles set by the Ministry of Finance of Ukraine, while their traditional role as “watchdogs” is still expected by managers (heads of institutions). Diverging expectations resulted in the role conflict that impedes the change in IAs’ role and performance auditing introduction in the Ukrainian central government. Moreover, we identify factors that motivate IAs to prioritise managers’ expectations, while trying to cope with the existing role conflict in Ukraine’s central government.
Originality/value
This study makes a threefold contribution by enriching the understanding of auditors’ roles, role conflicts that public sector auditors may experience and factors that influence how auditors cope with such conflicts, through the lenses of role theory; exploring the change in roles with the emergence of performance auditing; and shedding light on public sector auditing in the less explored context of a post-Soviet country.
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Hany Elbardan, Donald Nordberg and Vikash Kumar Sinha
This study aims to examine how the legitimacy of internal auditing is reconstructed during enterprise resource planning (ERP)-driven technological change.
Abstract
Purpose
This study aims to examine how the legitimacy of internal auditing is reconstructed during enterprise resource planning (ERP)-driven technological change.
Design/methodology/approach
The study is based on the comparative analysis of internal auditing and its transformation due to ERP implementations at two case firms operating in the food sector in Egypt – one a major Egyptian multinational corporation (MNC) and the other a major domestic company (DC).
Findings
Internal auditors (IAs) at MNC saw ERP implementation as an opportunity to reconstruct the legitimacy of internal auditing work by engaging and partnering with actors involved with the ERP change. In doing so, the IAs acquired system certifications and provided line functions and external auditors with data-driven business insights. The “practical coping mechanism” adopted by the IAs led to the acceptance (and legitimacy) of their work. In contrast, IAs at DC adopted a purposeful strategy of disengaging, blaming and rejecting since they were skeptical of the top management team's (TMT's) sincerity. The “disinterestedness” led to the loss of legitimacy in the eyes of the stakeholders.
Originality/value
The article offers two contributions. First, it extends the literature by highlighting a spectrum of behavior displayed by IAs (coping with impending issues vs strategic purposefulness) during ERP-driven technological change. Second, the article contributes to the literature on legitimacy by highlighting four intertwined micro-processes – participating, socializing, learning and role-forging – that contribute to reconstructing the legitimacy of internal auditing.
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Jessi L. Smith, Sylvia Mendez, Jennifer Poe, Camille Johnson, Dale K. Willson, Elizabeth A. Daniels, Heather Song and Emily Skop
Annual performance evaluations of faculty are a routine, yet essential, task in higher education. Creating (or revising) performance criteria presents an opportunity for leaders…
Abstract
Purpose
Annual performance evaluations of faculty are a routine, yet essential, task in higher education. Creating (or revising) performance criteria presents an opportunity for leaders to work with their teams to co-create evaluation metrics that broaden participation and minimise inequity. The purpose of this study was to support organisational leaders in developing equitable performance criteria.
Design/methodology/approach
We adopted the “dual-agenda” dialogues training that draws on concepts of collective self-efficacy and intersectionality for department leaders to co-create annual review criteria with their faculty members at one university. We used qualitative and quantitative data to assess the training and conducted an equity audit of the resulting annual review criteria.
Findings
Survey results from faculty members and departmental leaders (n = 166) demonstrated general satisfaction with the process used to create new criteria, perceptions that their criteria were inclusive and optimism about future reviews. Those with greater familiarity with the dialogues process had more positive perceptions of the inclusivity of their department’s criteria and more positive expectations of future reviews. The examination of eight indicators of equity illustrated that the resultant criteria were transparent and holistic.
Originality/value
This study builds on the relatively little research on faculty members’ annual performance evaluations, focussing on inclusive dialogues that centre equity and diversity. Results highlight the value of providing department leaders with evidence-based tools to foster system-level change through equitable evaluation policies. A toolkit is available for adaptation of the “dual-agenda” leadership training to both co-create annual review criteria and improve equity and inclusion.
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