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Open Access
Article
Publication date: 6 March 2017

Kamil Omoteso and Hakeem Yusuf

The purpose of this paper is to contend that the dominant voluntarism approach to the accountability of transnational corporations (TNCs) is inadequate and not…

16898

Abstract

Purpose

The purpose of this paper is to contend that the dominant voluntarism approach to the accountability of transnational corporations (TNCs) is inadequate and not fit-for-purpose. The authors argue for the establishment of an international legal mechanism for securing the accountability of TNCs, particularly in the context of developing countries with notoriously weak governance mechanisms to protect all relevant stakeholders.

Design/methodology/approach

The study adopts insights from the fields of management and international law to draw out synergies from particular understandings of corporate governance, corporate social responsibility and international human rights. The challenges to governance in developing countries with regard to securing the accountability of TNCs are illustrated with the Nigerian experience of oil-industry legislation reform.

Findings

The specific context of the experiences of developing countries in Africa on the operations of TNCs particularly commends the need and expedience to create an international legal regime for ensuring the accountability of TNCs.

Originality/value

Mainstream research in this area has focused mainly on self and voluntary models of regulation and accountability that have privileged the legal fiction of the corporate status of TNCs. This paper departs from that model to argue for an enforceable model of TNC’s accountability – based on an international mechanism.

Details

critical perspectives on international business, vol. 13 no. 1
Type: Research Article
ISSN: 1742-2043

Keywords

Article
Publication date: 27 July 2018

Pran Krishansing Boolaky, Kamil Omoteso, Masud Usman Ibrahim and Ismail Adelopo

The purpose of this paper is to examine the level of accounting development and the adoption of IFRS in the four foremost economies in the Middle East and North Africa…

1138

Abstract

Purpose

The purpose of this paper is to examine the level of accounting development and the adoption of IFRS in the four foremost economies in the Middle East and North Africa (MENA)—Egypt, Jordan, Libya and UAE. Through the lens of institutional theory, the study investigates the impact of economic, political, legal and cultural institutions on the development of these countries’ accounting practices and their readiness to use IFRS.

Design/methodology/approach

This research uses accounting development indices obtained from current literature as well as recent World Economic Forum and UNCTAD reports to examine the development of accounting in these MENA countries and their inclination to adopt IFRS.

Findings

The study identifies a number of impediments to the development of accounting practices and adoption of IFRS in these countries. It also reveals that three of the four MENA countries (Egypt, Jordan and UAE) could be placed on a level playing field with their principal trading partners (the US, the UK, Germany and Italy) given the formers’ business environments, methods of raising finance and levels of professional accounting practices.

Research Implications/limitations

Although limited to only four jurisdictions, findings from the study have important implications for investors and parties that are interested in improving the value relevance of the information presented by firms especially in a globalised economy with increasing cross-listing.

Originality/value

This study extends the frontier of knowledge on the development of accounting and IFRS adoption by focusing on the MENA region. It is the first effort that the authors are aware of to adopt such a multifarious approach.

Details

Journal of Accounting in Emerging Economies, vol. 8 no. 3
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 6 June 2016

Pran Boolaky and Kamil Omoteso

This paper aims to investigate the position of international financial services centres (IFSCs) in the International Federation of Accountants’ countries’ status on the…

1504

Abstract

Purpose

This paper aims to investigate the position of international financial services centres (IFSCs) in the International Federation of Accountants’ countries’ status on the adoption of International Standards on Auditing (ISA) and assess the factors influencing ISA adoption in these centres.

Design/methodology/approach

This research drew its data from various sources, including the World Economic Forum (WEF) data set, the World Bank Report on Observation of Standards and Codes, the World Development Indicators and the Economic Intelligence Unit Report on Democracy Index on 50 countries classified as IFSCs. The adoption status is then regressed on a number of variables of interest. To establish that the results are robust, the authors used a combination of different regression techniques comprising OLS, multinomial and logistic regressions.

Findings

In addition to the gross domestic product growth and education level, this paper adds new evidence to the literature by reporting the positive association between the level of democracy and the enforcement of securities’ regulation on ISA adoption. It argues that political, economic, social and legal factors impact on ISA adoption in the IFSCs.

Research limitations/implications

The sample size is limited to 50 from a population of 99 IFSCs because of the lack of data. Some of the independent variables are basically archival data. Reliance is placed on WEF with regard to the measurement of protection of minority interest, securities and exchange regulations and on the Economic Intelligence Unit for democracy index.

Practical implications

This paper stresses the importance of ISAs in IFSCs and the role of political power and the enforcement of securities laws on the adoption of ISA.

Originality/value

This study fills the research gap relating to the absence of empirical studies on ISA adoption and its drivers in IFSCs.

Details

Managerial Auditing Journal, vol. 31 no. 6/7
Type: Research Article
ISSN: 0268-6902

Keywords

Book part
Publication date: 17 July 2014

Kamil Omoteso and Musa Obalola

This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management…

Abstract

Purpose

This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud.

Design/methodology/approach

The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds.

Findings

The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud.

Research limitations/implications

The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations.

Practical implications

As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes.

Originality/value

The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.

Details

Ethics, Governance and Corporate Crime: Challenges and Consequences
Type: Book
ISBN: 978-1-78350-674-3

Keywords

Book part
Publication date: 4 March 2015

Matthias Nnadi, Kamil Omoteso and Yi Yu

This paper provides evidence on the impact of regulatory environment on financial reporting quality of transitional economies. This study compares the financial reporting…

Abstract

This paper provides evidence on the impact of regulatory environment on financial reporting quality of transitional economies. This study compares the financial reporting quality of Hong Kong firms which are cross-listed in mainland China with those of Hong Kong firms cross-listed in China using specific earnings management metrics (earnings smoothing, timely loss recognition, value relevance and managing towards earnings targets) under pre- and post-IFRS regimes.

The financial reporting quality of Chinese A-share companies and Hong Kong listed companies are examined using earnings management measures. Using 2007 as base year, the study used a cumulative of −5 and +5 years of convergence experience which provide a total of 3,000 firm-year observations. In addition to regression analyses, we used the difference-in-difference analysis to check for the impact of regulatory environments on earnings management.

Through the lens of contingency theory, our results indicate that the adoption of the new substantially IFRS-convergent accounting standards in China results in better financial reporting quality evidenced by less earning management. The empirical results further shows that accounting data are more value relevant for Hong Kong listed firms, and that firms listed in China are more likely to engage in accrual-based earnings management than in real earnings management activities. We established that different earnings management practices that are seemingly tolerable in one country may not be tolerable in another due to level of differences in the regulatory environments.

The findings show that Hong Kong listed companies’ exhibit higher level of financial reporting quality than Chinese listed companies, which implies that the financial reporting quality under IFRS can be significantly different in regions with different institutional, economic and regulatory environments. The results imply that contingent factors such as country’s institutional structures, its extent of regulation and the strength of its investor protection environments impact on financial reporting quality particularly in transitional and emerging economies. As such, these factors need to be given appropriate considerations by financial reporting regulators and policy-makers interested in controlling earnings management practices among their corporations.

This study is a high impact study considering that China plays a significant role in today’s globalised economy. This study is unique as it the first, that we are aware of, to compare real earnings activities against accrual-based earnings management in pre- and post-IFRS adoption periods within the Chinese and Hong Kong financial reporting environments, distinguishing between cross-listed and non-cross-listed firms.

Details

Neo-Transitional Economics
Type: Book
ISBN: 978-1-78441-681-2

Keywords

Article
Publication date: 27 May 2014

Kamil Omoteso and Hakeem Ishola Mobolaji

This study aims to investigate the impact of governance indices (especially control of corruption) on economic growth in some selected Sub-Sahara African (SSA) countries…

1179

Abstract

Purpose

This study aims to investigate the impact of governance indices (especially control of corruption) on economic growth in some selected Sub-Sahara African (SSA) countries with a view to making policy recommendations. Specifically, the study attempts to assess whether either governance reforms (especially those relating to control of corruption) or simultaneous policy reforms could have any impact on the growth of the sample SSA countries.

Design/methodology/approach

The governance indicators used in this study were drawn from the PRS Group and the Worldwide Governance Indicators for 2002-2009, while the real gross domestic product (GDP) per capita growth data were obtained from the World Bank database. The study covered 47 SSA countries, and it adopted the panel data framework, the fixed effect, the random effect and the maximum likelihood estimation techniques for the analyses.

Findings

The study found that political stability and regulatory quality indicators have growth-enhancing features, as they impact on economic growth in the region significantly, while government effectiveness impacts negatively on economic growth in the region. Despite, several anti-corruption policies in the region, the impact of corruption control on economic growth is not very obvious. The study also found that simultaneous implementation of the voice and accountability and the rule of law indicators has more positive impact on economic growth in the region. Both policies are complementary, and, hence, can be pursued simultaneously.

Research limitations/implications

The results suggest that reform efforts that aim at enhancing accountability, regulatory quality, political stability and the rule of law have more growth-enhancing features and, thus, should be given more priority over reform efforts that singly address the issue of control of corruption due to the endemic, systemic and ubiquitous nature of corruption in the region.

Practical implications

The study suggests that reform efforts that aim at enhancing accountability, regulatory quality and rule of law have more growth-enhancing features and, therefore, should be given more priority.

Originality/value

Many previous studies attempted to examine the impact of corruption on economies, but this paper tries to assess the effect of corruption control and other governance indices on economic growth in the most vulnerable region of the world, the SSA. Besides, the study adopts the panel data framework which makes it possible to allow for differences in the form of unobservable individual country effects.

Details

Social Responsibility Journal, vol. 10 no. 2
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 4 November 2014

Umar-Farook Aziz and Kamil Omoteso

The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its…

Abstract

Purpose

The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its value relevance and decision usefulness in the aftermath of the financial crisis.

Design/methodology/approach

This research used a structured questionnaire to collect data from practising accountants, auditors and accounting academics within the UK. A factor analysis was undertaken to examine the potential inter-correlations that could exist between different factors obtained from the literature. The analysis reduced these variables into the more important factors which were subsequently modelled in a logistic regression analysis.

Findings

The paper identified, as critical factors for enhancing statutory audits, “a continuously updated accounting curriculum”, “expansion of the auditor's role”, “frequent meetings between regulators and auditors”, “mandatory rotation of auditors”, “limiting the provision of non-audit services”, “knowledge requirements from disciplines other than accounting” and “encouraging joint audits”. It is hoped that addressing these issues might improve confidence in the audit profession, thereby reinforcing its value relevance.

Research limitations/implications

The study's findings imply that professional accountancy bodies, accounting educators and accounting firms will need to incorporate the key factors identified in this study into their curriculum and training schemes. However, the generalisability of these findings might be limited as the research data were primarily obtained from UK accountants alone.

Originality/value

This study extends the frontiers of knowledge on critical factors that could reinforce users’ confidence in the statutory audit function and have implications for policy and practice.

Details

Journal of Applied Accounting Research, vol. 15 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 6 March 2009

Hakeem Ishola Mobolaji and Kamil Omoteso

The general objective of the paper is to investigate the impact of corruption and other institutional factors on economic growth in some selected transitional economies…

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Abstract

Purpose

The general objective of the paper is to investigate the impact of corruption and other institutional factors on economic growth in some selected transitional economies for the period of 1990‐2004 and make policy recommendations for combating it. Specifically, the study attempts to: assess whether corruption has any impact on the growth of the sample countries; examine whether simultaneous policy reform focussing on accountability and rule of law impact positively on growth of these economies; and investigate whether corruption in these countries exhibit the efficient grease syndrome.

Design/methodology/approach

The indices for corruption and other institutional variables were drawn from International Country Risk Guide (ICRG – PRS) for the period of 1990‐2004, the polity data were obtained from the Polity IV, while the real gross domestic product (GDP) per capita growth were obtained from the Penn World 6.2. The study covered the period between 1990 and 2004 that coincides with the real transition of these economies from centrally planned to market economies. It adopts the panel data framework, the fixed effect, the random effect and the maximum likelihood estimation techniques for the analysis.

Findings

The study's findings support Mauro's hypothesis that corruption has a negative impact on the economies. However, the study cannot find a robust statistical evidence to support the efficient grease hypothesis of Leff and Huntington.

Research limitations/implications

The paper recommends policy efforts that would strengthen accountability and bureaucratic quality, reduce discretionary power, ethnic fractionalisation and military involvement in politics with a view to enhancing social responsibility practices at both micro and macro levels.

Originality/value

Unlike previous studies that focussed on single cross‐country regression with an assumption of identical aggregate production function for all countries, this study adopts the panel data framework that makes it possible to allow for differences in the form of unobservable individual country effects. The paper employs the fixed effect, the random effect and the maximum likelihood estimation techniques.

Details

Social Responsibility Journal, vol. 5 no. 1
Type: Research Article
ISSN: 1747-1117

Keywords

Book part
Publication date: 18 April 2011

Kamil Omoteso

In every country, those in charge of governance are expected to play a major role in shaping business and economic activities. They are expected to come up with a…

Abstract

In every country, those in charge of governance are expected to play a major role in shaping business and economic activities. They are expected to come up with a framework that will underpin the principles, policies, laws and regulations they put in place to guide these economic and business activities and the compliance thereof. Such frameworks always depend on the political-economic philosophy of the country or those in charge of governance. As a result of the enormous power and influence political institutions wield on business organisations, these institutions constitute one of the cardinal ‘environments’ that ought to be considered when businesses are formulating their strategies as they constitute the pivot upon which the wheel of other environmental factors rotate.

Details

Governance in the Business Environment
Type: Book
ISBN: 978-0-85724-877-0

Book part
Publication date: 4 March 2015

Abstract

Details

Neo-Transitional Economics
Type: Book
ISBN: 978-1-78441-681-2

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