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Article
Publication date: 4 September 2023

Md Khokan Bepari, Shamsun Nahar, Abu Taher Mollik and Mohammad Istiaq Azim

In this study the authors examine the nature and contents of key audit matters (KAMs), and the consequences of KAMs reporting on audit quality in the context of a developing…

Abstract

Purpose

In this study the authors examine the nature and contents of key audit matters (KAMs), and the consequences of KAMs reporting on audit quality in the context of a developing country, Bangladesh. The authors’ proxies of audit qualities are discretionary accruals, small positive earnings surprise, audit report lag, earnings management via below the line items and audit fees.

Design/methodology/approach

The authors use content analysis of the KAMs for the period 2018–2021 to understand the nature and extent of KAMs reported by auditors in Bangladesh. The authors then use multivariate regression analysis to examine the effect of the number and content characteristics of KAMs on audit quality by using multivariate regression analysis.

Findings

Auditors in Bangladesh disclose a higher number of KAMs compared to other countries, disclose short descriptions of KAMs and industry generic KAMs. The authors document significant cross-sectional variations in the number and content characteristics of KAMs reported by auditors in Bangladesh. The authors’ pre-post analysis suggest that audit quality has improved after the adoption of KAMs. Cross-sectional analysis suggests that KAMs number and content characteristics are related to audit quality.

Practical implications

The authors’ findings imply that the KAMs reporting has the potential to play significant monitoring role in reducing the opportunistic behavior of managers. Hence, KAMs reporting can play a significant role in reducing the agency problem. For regulators, shareholders and corporate managers, the authors’ findings imply that if the audit quality is to be increased, the audit effort should be supported by an appropriate amount of audit fee.

Social implications

The content characteristics of KAMs significantly influence managerial reporting behavior and affect the level of audit efforts.

Originality/value

Unlike developed countries (Gutierrez et al., 2018; Lennox et al. 2022), this study supports that KAMs reporting improves audit quality and control opportunistic behavior of managers in developing countries. The authors show that even though the KAMs disclosure quality is poor, it has the potential to improve financial reporting quality.

Details

Journal of Accounting in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 2 January 2024

Kenta Ikeuchi, Kyoji Fukao and Cristiano Perugini

The authors' work aims to identify the employer-specific drivers of the college (or university) wage gap, which has been identified as one of the major determinants of the…

Abstract

Purpose

The authors' work aims to identify the employer-specific drivers of the college (or university) wage gap, which has been identified as one of the major determinants of the dynamics of overall wage and income inequality in the past decades. The authors focus on three employer-level features that can be associated with asymmetries in the employment relation orientation adopted for college and non-college-educated employees: (1) size, (2) the share of standard employment and (3) the pervasiveness of incentive pay schemes.

Design/methodology/approach

The authors' establishment-level analysis (data from the Basic Survey on Wage Structure (BSWS), 2005–2018) focusses on Japan, an economy characterised by many unique economic and institutional features relevant to the aims of the authors' analysis. The authors use an adjusted measure of firm-specific college wage premium, which is not biased by confounding individual and establishment-level factors and reflects unobservable characteristics of employees that determine the payment of a premium. The authors' empirical methods account for the complexity of the relationships they investigate, and the authors test their baseline outcomes with econometric approaches (propensity score methods) able to address crucial identification issues related to endogeneity and reverse causality.

Findings

The authors' findings indicate that larger establishment size, a larger share of regular workers and more pervasive implementation of IPSs for college workers tend to increase the college wage gap once all observable workers, job and establishment characteristics are controlled for. This evidence corroborates the authors' hypotheses that a larger establishment size, a higher share of regular workers and a more developed set-up of performance pay schemes for college workers are associated with a better capacity of employers to attract and keep highly educated employees with unobservable characteristics that justify a wage premium above average market levels. The authors provide empirical evidence on how three relevant establishment-level characteristics shape the heterogeneity of the (adjusted) college wage observed across organisations.

Originality/value

The authors' contribution to the existing knowledge is threefold. First, the authors combine the economics and management/organisation literature to develop new insights that underpin the authors' testable empirical hypotheses. This enables the authors to shed light on employer-level drivers of wage differentials (size, workforce composition, implementation of performance-pay schemes) related to many structural, institutional and strategic dimensions. The second contribution lies in the authors' measure of the “adjusted” college wage gap, which is calculated on the component of individual wages that differs between observationally identical workers in the same establishment. As such, the metric captures unobservable workers' characteristics that can generate a wage premium/penalty. Third, the authors provide empirical evidence on how three relevant establishment-level characteristics shape the heterogeneity of the (adjusted) college wage observed across organisations.

Details

International Journal of Manpower, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0143-7720

Keywords

Open Access
Article
Publication date: 19 May 2022

Rosa Portela Forte and Sérgio Carvalho

The purpose of this study is to analyze the influence of the firms' external environment on their export intensity. More specifically, it assesses whether domestic market…

1743

Abstract

Purpose

The purpose of this study is to analyze the influence of the firms' external environment on their export intensity. More specifically, it assesses whether domestic market characteristics such as domestic demand and general export environment related to tradability across borders affect firms' export intensity.

Design/methodology/approach

The authors use a sample of 29,266 firms from nine European countries, for the period of 2010–2016, and test several estimation methods (random effects models, Tobit models, and Heckman's selection models).

Findings

Results show that external factors such as domestic demand and ease of trade across borders are important determinants of firms' export intensity. Moreover, results reveal that firm's internal characteristics such as age, size and productivity also play an import role.

Originality/value

Studies about the influence of the firms' external environment on firms' export intensity are scarce because most of them are confined to a single country context. In this way, the present study contributes to the body of knowledge on the influence that external factors can have on firms' export performance by analyzing firms from nine European countries, which has important policy implications.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

Article
Publication date: 13 October 2022

Abhisheck Kumar Singhania and Nagari Mohan Panda

The study aims to investigate the mediation effect of the Audit Committee’s (AC) effectiveness on the relationship between knowledge intensity and firm performance (FP) by…

Abstract

Purpose

The study aims to investigate the mediation effect of the Audit Committee’s (AC) effectiveness on the relationship between knowledge intensity and firm performance (FP) by considering the disparate effect of each AC characteristic on its effectiveness.

Design/methodology/approach

The study uses the partial least squares-structural equation model (PLS-SEM) to weigh the AC characteristics for its effectiveness and analyzes the relationships between the variables included in the models. Data was collected from authentic sources for 133 National Stock Exchange (NSE)-listed companies in six industries covering the period 2016 to 2020.

Findings

The results indicate that eight out of eleven AC characteristics, namely, nonexecutive directors, independence, expertise, AC-charter, multiple directorships, frequency of AC meetings, attendance of AC meetings and board meetings by AC directors, significantly influence the AC effectiveness while mediating the relationship between knowledge intensity and FP. Further, each characteristic of AC has a disparate effect on AC effectiveness depending on the measurement context.

Research limitations/implications

Apart from guiding the policymakers, management and stakeholders to effectively use AC characteristics in enhancing FP, this study further contributes to the literature by providing a new way to weight AC characteristics based on their individual contributions; and exploring new path models to analyze the multidimensional effect of various AC characteristics.

Originality/value

To the best of the authors’ knowledge, the study is the first to examine the mediation role of AC effectiveness on the relationship between the knowledge intensity of the firms and their performance. It demonstrates improvisation in measuring AC effectiveness using the disparate weights for each AC characteristic, computed based on their relative contribution to AC effectiveness.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 25 January 2024

Adhitya Agri Putra and Doddy Setiawan

This research paper aims to examine the effect of chief executive officer (CEO) characteristics on earnings management.

Abstract

Purpose

This research paper aims to examine the effect of chief executive officer (CEO) characteristics on earnings management.

Design/methodology/approach

Research samples are manufacturing firms listed in the Indonesian Stock Exchange 2015–2021. CEO characteristics include narcissism, gender, age, tenure, experience, nationality and founding family status. Data analysis uses random-effect regression.

Findings

The result shows that higher narcissism CEOs have aggressive characteristics so they will be more likely to engage in accrual and real earnings management. Female CEOs, foreign CEOs and founding-family CEOs have higher monitoring and business ethics characteristics so they will be less likely to engage in accrual and real earnings management. CEOs with higher education levels have higher thinking complexity so they will be more likely to engage in accrual earnings management with higher regulator and auditor monitoring barriers than real earnings management. CEOs with financial and accounting experience are familiar with accounting standards and auditor monitoring barriers so they will be more likely to engage in accrual earnings management than real earnings management. On the other hand, there are no effects of CEO age and tenure on earnings management.

Originality/value

This research contributes to providing evidence of the effect of CEO characteristics on earnings management in a specific industry such as manufacturing firms and emerging markets such as Indonesia with the majority group firms being family firms.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 6 November 2023

Abhisheck Kumar Singhania and Nagari Mohan Panda

This study aims to examine the relationship between audit committee (AC) effectiveness and firm performance (FP) with the moderation of knowledge intensity while observing the…

Abstract

Purpose

This study aims to examine the relationship between audit committee (AC) effectiveness and firm performance (FP) with the moderation of knowledge intensity while observing the varying effect of each AC characteristic’s influence on its effectiveness.

Design/methodology/approach

This study examines 133 companies covering five years from 2016 to 2020 using the partial least squares-structural equation model and weighing AC effectiveness-related characteristics through multiple regression between AC characteristics and the AC effectiveness construct.

Findings

The results indicate that the knowledge intensity of the firms negatively influences the relationship between their AC effectiveness and FP, implying that the ACs are not sophisticated enough to monitor the knowledge component of the firm’s assets. Among AC characteristics, six attributes have a significant positive impact, two have a negative impact and three have no significant influence on AC effectiveness while influencing FP.

Research limitations/implications

Apart from guiding the regulators, managers and other stakeholders to choose an appropriate mix of AC characteristics for enhancing FP, the study contributes to the existing literature by providing evidence that ACs are ineffective in monitoring the knowledge assets of the company compared to physical assets.

Originality/value

This study is pioneering in investigating the moderation role of knowledge intensity on the relationship between AC effectiveness and FP. While providing a comprehensive and holistic view of AC effectiveness by considering 11 AC characteristics’ individual as well as aggregate effects on FP, it removes the obsolescence of earlier research in the Indian context owing to the latest regulatory reforms.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 6 December 2022

Elmar Puntaier, Tingting Zhu and Paul Hughes

Diversity in boards has gained attention as a reflection of societal imbalances. The purpose of this paper is to investigate the impact of diversity in terms of both gender and…

Abstract

Purpose

Diversity in boards has gained attention as a reflection of societal imbalances. The purpose of this paper is to investigate the impact of diversity in terms of both gender and nationality in management boards of small and medium-sized enterprises (SMEs) on firm performance from an upper echelons perspective. The authors also examine how board-specific characteristics influence the structural makeup of boards in gender and nationality diversity terms.

Design/methodology/approach

The authors focus on the UK because of its individualistic society and flexible labour market and assess 309 SMEs in the manufacturing industry over 2009–2019. A 3-stage least squares (3SLS) estimator is used to analyse the data, the Shannon index to measure board diversity, return on assets as proxy for firm performance, and owner-manager presence, board member age and tenure are the board-specific characteristics of primary interest.

Findings

Both gender and nationality diversity contribute to firm performance and represent distinct upper echelon characteristics that change the cognitive and psychological dynamics of boards. Firms with larger boards do not perform better, but diverse boards reduce the narrowing view of CEOs. Yet the presence of owner-managers, despite their performance-enhancing contribution, holds firms back from benefitting from diversity as a strategic choice.

Originality/value

This study extends the upper echelons theory to include board diversity as an important aspect that should become more central in upper echelon thinking when understanding firm performance. The authors’ findings suggest that theoretical developments in search of understanding firm behaviour must proceed by accounting for diversity and not simply focusing on decision-making styles.

Details

International Journal of Entrepreneurial Behavior & Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 28 October 2022

Muhammad Farooq, Qadri Al-Jabri, Muhammad Tahir Khan, Muhamamad Akbar Ali Ansari and Rehan Bin Tariq

The present study aims to investigate the impact of corporate governance proxies by ownership structure and firm-specific characteristics, i.e. firm size, leverage, growth…

Abstract

Purpose

The present study aims to investigate the impact of corporate governance proxies by ownership structure and firm-specific characteristics, i.e. firm size, leverage, growth opportunities, previous year dividend, firm risk, profitability, and liquidity on dividend behavior of the Pakistan Stock Exchange (PSX) listed firms.

Design/methodology/approach

Final sample of the study consists of 140 PSX-listed firms. The study covers a period of six years, starting from 2015 to 2020. Dividend payout dummy, dividend payout ratio, and dividend yield were used to assess the dividend behavior of the sample firms. The appropriate regression procedures (logistic, probit, ordinary least square (OLS), and fixed effect regression) are used to test the study hypothesis. To check the robustness of the result, a system GMM estimation technique is also used in the present study.

Findings

The study reveals that institutional ownership, foreign ownership, and individual ownership have a significant positive whereas managerial ownership has a significant negative impact on the dividend decision of sample firms. Among firm-specific characteristics, it was found that liquidity, profitability, and the previous year's dividend were significantly positive, while growth opportunities were significantly inversely associated with dividend payout decisions of PSX-listed firms.

Practical implications

This study sheds light on the relationship between dividend policy, ownership structure, and firm-specific factors in the context of an emerging market like Pakistan. The study's findings have important implications for managers, minority shareholders, lawmakers, and investors looking for guidance on the dividend policy of publicly-traded non-financial firms.

Originality/value

The literature lacks studies that together analyze the ownership characteristics and firm-specific variables on dividend decisions, particularly in the context of developing economies. The current study aims to fill this gap.

Details

Asia-Pacific Journal of Business Administration, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-4323

Keywords

Article
Publication date: 18 December 2023

Yong H. Kim, Bochen Li, Hyun-Han Shin and Wenfeng Wu

It is documented that companies and government agencies in the USA invest more in the fourth fiscal quarter without having higher investment opportunities. While previous studies…

2311

Abstract

Purpose

It is documented that companies and government agencies in the USA invest more in the fourth fiscal quarter without having higher investment opportunities. While previous studies focus on the agency conflicts and information asymmetry within organizations, this study is motivated by Scharfstein and Stein's (2000) two-tiered agency model and aims to examine how firms' external business environment affects the “fourth quarter effect.”

Design/methodology/approach

The authors implement this study in a sample of 41 countries and observe similar seasonality in firm investment as documented in the US market.

Findings

More importantly, using country characteristics, this study finds that firms from countries with better investor rights and protection, and more developed financial markets show less severe over-investment in the fourth fiscal quarter.

Originality/value

This paper contributes to the literature of law and finance, and the internal capital market, by investigating the quarterly investment patterns of firms from 41 countries. The authors find that similar to the results in earlier studies on the US market, firms in the global market increase their capital expenditure in the fourth fiscal quarter, indicating that the internal agency conflicts between the headquarters and divisional managers are widespread across the world. The authors also find that firms that operate in countries with higher investor rights and protection, and more developed financial markets, tend to show less severe “fourth quarter effect”.

Details

China Finance Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 28 February 2023

Habib Jouber

Considering corporate governance (CG hereinafter) practices' variety across Anglo-American and European countries, this study relies on contingency and complexity theories to…

Abstract

Purpose

Considering corporate governance (CG hereinafter) practices' variety across Anglo-American and European countries, this study relies on contingency and complexity theories to investigate the effect of environmental sustainability performance (ESP hereinafter) on shareholder value under various configurations of board of directors (BoD hereinafter), firm and country characteristics.

Design/methodology/approach

The author used the Thomson Reuters Environment Pillar Score (ASSET4) and the Total Shareholder Return to assess ESP and shareholder value respectively. The author applied a fuzzy-set qualitative comparative analysis (fsQCA hereinafter) to an unbalanced panel of 2,284 observations from 486 European and Anglo-American non-financial listed firms over the period 2016–2020.

Findings

The author found a positive association between ESP and shareholder value and he displayed notable differences between Anglo-American and European economies regarding causal predictors of this positive association. Within European firms operating under civil law code where investor protection is low and family ownership is widespread, ESP creates shareholder value under configurations of causal predictors that significantly differ from those of their Anglo-American peers. The author's findings are robust to different identification strategies.

Practical implications

This study assists researchers, practitioners, shareholders and policymakers the significant roles that BoD diversity, organisational and institutional traits are jointly playing as determinants of the ESP-shareholder value relationship.

Originality/value

The author's study offers a more encompassing, complete and theoretically richer picture of the key drivers and outcomes of ESP.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

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