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The purpose of this study is to establish the relationship between chief executive officer (CEO) power, audit committee effectiveness and earnings quality in regulated firms in Uganda.

The authors employed cross-sectional and correlational research designs, based on a sample of 136 regulated firms in Uganda. Data were collected using a questionnaire survey from Chief Finance Officers and Chief Audit Executives. Data were analyzed using a Statistical Package for Social Sciences and Partial Least Squares Structural Equation Modeling.

Results indicate that CEO power causes negative variances in earnings quality. The results also reveal that audit committee effectiveness positively relates relatively similarly with earnings quality. In addition, CEO power and audit committee effectiveness are negative and significantly related. The results further indicate that CEO power and earnings quality are mediated by audit committee effectiveness.

CEO power creates an opaque accounting environment which may leave the stakeholders unable to evaluate the true economic reality of the firm. Audit committee effectiveness is an important enabler for reporting high-quality earnings even in the presence of a powerful CEO.

This study contributes toward a methodological stance of using perceptions to understand earnings quality in regulated firms in Uganda. This is probably the first study that has specifically explored earnings quality using only the fundamental qualitative characteristics of accounting information (as proxies) as enshrined in the Conceptual Framework for Financial Reporting 2018 particularly in Uganda since Her adoption of International Financial Reporting Standards in 1998. Second, the indirect effect of audit committee effectiveness and CEO power is tested.

This study aims to examine the relationship between corporate governance (CG) and various measures of earnings quality in listed companies on Tehran Stock Exchange (TSE). The theoretical intuition for prediction of any relationship between earnings quality and CG is based on the behavioral theory and the institutional settings in Iran.

This study used the data of 117 listed companies on the TSE for the period from 2005 to 2019. The authors use panel data regression as the main methodology, along with principal component analysis, t-test and rank-sum test.

This study finds that the CG has a positive association with earnings quality. More precisely, better CG mechanisms cause lower earnings smoothness, more predictable and persistent earnings, and higher levels of timeliness, conservatism and value relevance. The relationship between CG and earnings quality is statistically and economically significant for all models.

The findings further the understanding of the role of CG in improving earnings quality in an Islamic and emerging country. First, this study provides evidence on the relation between CG and earnings quality by focusing on the behavioral theory, which suggests that corporate decision-making is not only influenced by formal CG mechanisms, but also by informal CG arrangements. In this case, this study departs from the restrictive theories (specifically, agency theory) that are widely used in past literature. Second, this study constructs an index that fits to corporate context of Iran rather than applying indexes introduced in Anglo-American environments.

This paper aims to examine the relationship between earnings quality and corporate cash holdings in an emerging economy. Existing literature posits that earnings quality is a result of information asymmetry and firms with lower earnings quality increases cash holdings, to shield the firm from future uncertainties. In this paper, the authors propose a ‘private benefits hypothesis’, which suggests that lower earnings quality is an indicator of opportunism and expropriation of resources in the firm, through tunneling or excessive executive compensations. As a result, firms with lower earnings quality increase cash holdings in their control, to increase their private benefits and to avoid the scrutiny of the external stakeholders. The authors further examine the monitoring role played by institutional investors on cash holdings, with varying degrees of earnings quality.

This study uses an unbalanced panel data sourced from Prowessdx, from 2000 to 2019. The analysis employs 20,231 firm-year observations from 2,421 firms. Earnings quality is calculated following Dechow and Dichev (2002).

Empirical analysis confirms that the firms with higher earnings quality reduce cash. Further, institutional investors reduce the cash holdings in firms with higher earnings quality. Institutional investors effectively reduce the cash only in firms with at least 10% of equity shareholding. The results are robust to alternative measures of earnings quality and endogeneity concerns.

This study diverges from the information asymmetry hypothesis in the existing literature on earnings quality and cash holdings and highlights the underlying private benefits hypothesis, that will impact cash holdings. Next, the 10% institutional shareholding is important in the Indian context as it represents the minimum threshold at which block holders can request extraordinary general meetings (Section 100 of the Companies Act 2013) or the involvement of the National Company Law Tribunal (NCLT) (Section 213 of the Companies Act 2013). This study highlights that unlike in Anglo-Saxon economies, institutional investors or other minority shareholders are empowered by the Companies Act 2013 to play a vital role in corporate governance with a mere 10% equity.

The purpose of this study is to examine the individual and combined effect of managerial ownership and external audit quality, as two control mechanisms, on earnings management.

This study applies ordinary least squares estimates on fixed-time effects panel regression model to test the impact of the investigated variables on earnings management for the whole population of banks and insurance companies listed at Damascus Securities Exchange (DSE) during the period from 2011 to 2018.

The empirical evidence suggests a negative non-linear relationship between managerial ownership (as proxied by board of directors’ ownership) on earnings management. However, neither audit quality nor the simultaneous effect of the managerial ownership and audit quality (Big 4) affects earnings management.

DSE is dominated by the financial sector and the number of observations is constrained by the recent establishment of DSE and the small number of firms listed at DSE. In addition, the non-availability of data on executive directors’ and foreign ownerships restrict our ability to uncover the impact of different dimensions of ownership structure on earnings management.

First, it stimulates investors to purchase stocks in financial firms that enjoy both high managerial ownership, as they seem enjoying higher earnings quality. Second, the findings encourage external auditors to consider the ownership structure when choosing their clients as the financial statements’ quality is affected by this structure. Third, researchers may need to consider the role of managerial ownership when analyzing the determinants of earnings management.

It fills the gap in the literature, as it investigates the impact of both managerial ownership and audit quality on earnings management in a special conflict context and in an unexplored emerging market of DSE. It suggests that managerial ownership exerts a significant role in controlling earnings management practices when loose regulatory environment combines conflict conditions. However, external audit quality fails to counter earnings management practices when conditions are fierce.

In this paper, the authors examine the association between the banking regulatory regime and the quality of bank earnings. We further investigate whether the banking agency regulatory characteristics moderate the association between banking regulation and earnings quality.

Using panel data spanning 29 years over the period 1991 to 2019, the authors model bank earnings quality as a function of scores for banking regulation for 170 banks in the East African region using both the feasible generalized least squares (FGLS) and generalized method of moments (GMM) estimation methods.

The results, which are robust for endogeneity among other checks, reveal a positive impact of bank regulatory mechanisms on the quality of bank earnings. The authors further establish differential impact of specific regulatory mechanisms, with some contributing positively toward earnings management while others contributing negatively toward earnings management. The differential impacts of banking regulation on earnings quality are also manifested in the country-level analyses.

First, the study utilises a mix of bank-specific, country-specific as well as economy-specific variables in one dataset. Second, the authors utilise survey-based data using the World Bank's Bank Regulation and Supervision Surveys (BRSS) for the periods 1999 to 2019. The authors assume that the bank regulatory mechanisms in place pre-1999 are close to the mechanisms in place as per the 1999 BRSS. Given limitations in data availability, the authors are not able to control for banks engaging in multiple activities such as insurance, underwriting of securities, FinTechs, among others.

The results are useful in bridging the gap between theory and practice regarding the expected effect of strict banking regulations on the quality of earnings in Eastern African Banks. For the positive impact of banking regulation on bank earnings quality to be felt, the institutional, social and environmental specificities of the five selected countries need to be adequately developed and taken into consideration.

This study is perhaps the first to utilise a large dataset of commercial banks from countries in a developing region characterised by relatively lower enforcement and dynamism in the banking regulation. Further, in-depth studies on the association between banking regulation and earnings quality remain sparse.

The purpose of this paper is to examine the association between corporate environmental disclosure quality (EDQ) and earnings quality (EQ).

The paper uses earnings persistence and accruals quality as a measures of EQ. The paper also uses panel data regression to examine the association between EDQ and EQ for a sample of 107 Iran non-financial firms. Two different theoretical frameworks are used to clarify whether and to what extent an association may exist as an explicit relationship between EDQ and EQ.

After controlling for several firm-specific characteristics, the results show that between 2011 and 2016, there has been a significant positive relationship between EDQ and EQ.

This study sheds light on the relevance of regulating corporate reporting within a setting where companies are already voluntarily reporting on environmental information. Findings have implications for policymakers who have mandated or considering mandating environmental reporting. To the policymakers, in particular, this study highlights the need for incorporating, within the listing rules, minimum requirements in relation to the nature and content of environmental reports.

The findings have implications for stakeholders in terms of effective information quality. The findings are important as more environmentally responsible firms may provide higher quality, more reliable and more transparent information to meet the ethical expectations of stakeholders.

This is the first study in Iran that considered the impact of EDQ on EQ. This study contributes to the literature on the relationship between EDQ and EQ by showing that the EDQ in Iran is associated with the EQ.

The purpose of this study is to examine the effect of International Financial Reporting Standards (IFRS) on earnings quality in a continental European context (i.e. France) more than a decade after their mandatory adoption. Furthermore, the authors investigate whether the IFRS effect depends on firm-specific incentives.

The authors construct an aggregated measure that considers the main qualitative information characteristics: reliability and relevance. They identify accruals quality, earnings smoothing and the degree of conditional conservatism as attributes of reliability and use earnings persistence, predictability, value relevance and timeliness to measure earnings relevance. To test the hypotheses, the authors use a sample of French listed companies. The analyses are based on ordinary least squares (OLS) fixed effects, the Newey–West estimator and the difference-in-difference approach. The authors also use cluster analysis to identify firms with high incentives for earnings quality.

The results reveal a decrease in earnings quality that persisted for a decade after IFRS adoption. This decrease is mainly due to a decline in earnings relevance, suggesting that the fair value principle worsened earnings volatility. However, the results show that there is an improvement in earnings reliability after IFRS adoption, suggesting that the international standards were able to constrain managerial opportunism. Additionally, the findings reveal that firm-specific incentives can enhance the positive effect of IFRS, but the incentives are not able to substitute for such effect.

The IFRS effect depends on firm-specific incentives.

The authors prove that firm-specific incentives are important to accentuate the positive effect of IFRS on earnings reliability and to mitigate the impact of IFRS on earnings relevance.

This paper makes several contributions to the literature. First, it addresses the relative lack of attention to the main qualitative characteristics in measuring earnings quality, that is, earnings reliability and earning relevance, and uses an aggregate earnings quality measure. Second, this paper uses a cluster analysis to highlight the role of firm-specific incentives in shaping the effect of IFRS on earnings quality.

This study aims to examine whether the adoption of International Financial Reporting Standards (IFRS) leads to accounting quality improvements in Egypt as a code-law country. In particular, the study examines earnings management, the construct often used to assess accounting quality.

The study compares earnings management practice for Egyptian listed companies before (2000-2006) and after (2007-2009) the adoption of IFRS.

The findings of the study reveal that accounting quality, as measured by earnings management, has decreased in post-adoption period compared to pre-adoption period. IFRS are set up to provide high-quality financial reporting. However, this cannot be achieved solely by a regulatory requirement to follow. The accounting system is a complementary component of the country’s overall institutional system. Institutional improvements did not simultaneously take place by the Egyptian government around the adoption of IFRS. The Egyptian government did not introduce a more effective enforcement system, mandatory corporate governance regulations, investor protection mechanisms and sufficient institutional knowledge of IFRS during that period. Thus, even if IFRS are higher quality standards, the institutional features of Egyptian market could eliminate any improvement in accounting quality arising from adopting IFRS.

The results of the study are consistent with prior research suggesting that the adoption of IFRS, which are generally perceived to be of higher quality than domestic standards, does not necessarily lead to higher accounting quality in code-law countries like Egypt. The overall results indicate that incentives dominate accounting standards in determining accounting quality in Egypt.

The main reason why countries adopt IFRS invariably is to improve accounting quality. It is, therefore, of interest to ascertain if this goal has been met, especially, in code-law countries such as Egypt.

This paper aims to examine the effect of audit quality of consolidated financial statements on the accuracy of analysts’ earnings forecasts from the viewpoint of users of financial statements.

This paper investigates the effect of dependence on the work of other auditors on error in analysts’ earnings forecasts based on samples from 2011 to 2012 (the period since implementation of the International Financial Reporting Standards in Korea). In addition, this paper examines the effects of use of Big 4 auditors, use of auditors with industry expertise and the proportion of overseas subsidiaries in relation to all subsidiaries on the association between dependence on the work of other auditors and error in analysts’ earnings forecasts.

This paper finds a positive relation between dependence on the work of other auditors and error in analysts’ earnings forecasts, suggesting that more dependence on the work of other auditors decreases the quality of the audit of consolidated financial statements; thus, to the extent that low-quality audits decrease reporting reliability, analysts’ forecasts are less likely to be accurate. This paper also finds that the positive relationship between dependence on the work of other auditors and error in analysts’ earnings forecasts is weakened when the principal auditor is a Big 4 auditor or one with industry expertise, because such auditors provide higher-quality audit services. However, the positive relationship between dependence on the work of other auditors and error in analysts’ earnings forecasts is further strengthened in cases where the proportion of overseas subsidiaries to all subsidiaries is higher. These results suggest that the complexity of the consolidation process increases as the proportion of overseas subsidiaries increases.

The findings are useful in analyzing the effects of adoption of the New ISA, implemented in 2014, which does not allow the division of audit responsibilities between principal auditors and other auditors. This paper also provides insights for regulators and practitioners to improve the auditor appointment system in the future.

The purpose of this paper is to examine the relationship between dividend policy and earnings quality of Vietnamese listed firms.

The sample includes firms listed on Vietnam stock exchange during the period between 2010 and 2016. Two measures of earnings quality are the annual firm-specific absolute value of residuals from Dechow and Dichev’s (2002) model and from Dechow and Dichev (2002) as modified by McNichols’s (2002) model. The firms’ dividend policy is captured by dividend paying status. This is a dummy variable that takes the value of 1 if the firm pays dividends and 0 otherwise. In addition, dividend yield and dividend payout ratio, which are continuous variables, are also used in this paper as alternative proxies for dividend policy.

Using panel data analysis, this paper documents that dividend payers have higher earnings quality than dividend non-payers. Dividends are an indicator of earnings quality. These findings are consistent with prior studies. After controlling for variables that may be related to earnings quality as well as for the year and industry fixed effects, this relation remains unchanged. In addition, this result is also robust after controlling for firm fixed effects.

This paper offers the empirical evidence on the relation between dividend policy and earnings quality in Vietnam, which is a frontier market.