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Article
Publication date: 13 October 2020

Redhwan Aldhamari, Mohamad Naimi Mohamad Nor, Mourad Boudiab and Abdulsalam Mas'ud

This study aims to examine the association between the effectiveness of risk committee (RC) and firms’ performance in Malaysian context. It also explores whether political…

Abstract

Purpose

This study aims to examine the association between the effectiveness of risk committee (RC) and firms’ performance in Malaysian context. It also explores whether political connection has an impact on the relationship.

Design/methodology/approach

This study, using a principle components analysis, derives a factor score for RC attributes to proxy the effectiveness of RC. It also uses both accounting and market performance to measure the company performance.

Findings

Using a sample of financial firms from 2004 to 2018, this study finds that both accounting and market performance are higher for firms with an effective RC. It also finds that the effectiveness of RC in monitoring and management of risks is more pronounced for politically connected firms (PCFs). In further tests, the paper finds that RC attributes (i.e. RC independence, qualification and gender) are positively and significantly associated with accounting performance, while those of RC existence and overlap are positively and significantly related to market performance. The study also finds that RC size (RC diligence) has a positive (negative) impact on financial firms accounting and market performance. The further analysis also shows that PCFs with a separate as well as larger RCs experience both higher accounting and market performance. This study’s results are robust for concerns of endogeneity.

Practical implications

The findings of this study resolve the ongoing debates surrounding political connection by suggesting financial firms not to have politically connected board members as doing so may deteriorate their performance. This study’s results are also useful for investors, regulators and policymakers.

Originality/value

To the best of the authors’ knowledge, this study, for the first time, introduces on the interaction term between the effectiveness of RCs and political connection to empirically explore how an effective RC may reduce the potential risk of political ties. As such, this study adds to the literature and sheds light on an aspect of risk (i.e. risk stems from establishing close link with the government) that is growing in importance.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 7
Type: Research Article
ISSN: 1472-0701

Keywords

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Article
Publication date: 29 June 2010

Shamsul Nahar Abdullah, Nor Zalina Mohamad Yusof and Mohamad Naimi Mohamad Nor

This paper seeks to examine the effects of Malaysian Code on Corporate Governance on the nature of financial restatements in Malaysia and whether corporate governance…

Abstract

Purpose

This paper seeks to examine the effects of Malaysian Code on Corporate Governance on the nature of financial restatements in Malaysia and whether corporate governance characteristics are associated with financial restatements.

Design/methodology/approach

Data for this paper are obtained from annual reports that had been restated for the period of 2002‐2005 with firm‐years being the unit of observation. A control group comprising non‐restating firms is formed using match‐pair procedures where restated and non‐restated firms are matched by size, industry, exchange board classification, and financial year end. The data are subsequently analyzed using a t‐test, the Pearson correlation and logistic regression.

Findings

The results show that the primary reason for misstating the accounts is to inflate earnings. The nomination committee of the firms that restated is found to be less independent with higher managerial ownership. The logistic regression analysis indicates that the extent of ownership by outside blockholders deters firms from misstating accounts. Surprisingly, audit committee independence is associated with the likelihood of financial misstatement. Financial restatements, nevertheless, are not found to be associated with board independence, managerial ownership, and CEO duality. Finally, the results show that firms with high level of debts are more likely to commit in financial misstatement.

Practical implications

The research is significant as it provides evidence on the role of corporate governance, especially the independence of the nomination committee and extent of ownership by outside blockholders in Malaysia. It shows that outside blockholders is effective in disciplining managers so that the accounts so prepared are not misleading. The move in 2007 by the Malaysian Government to require companies audit committee to be composed of only independent and non‐executive directors, as well as requiring audit committee members to be financially literate, should be seen as important in ensuring the effectiveness of the audit committee.

Originality/value

This research is considered as the first study which examines the effects of corporate governance variables on the incidents of financial restatements in a developing country. The findings of this paper would be useful for policy makers in evaluating the importance of corporate governance in emerging countries, specifically on the issue of quality financial reporting.

Details

Managerial Auditing Journal, vol. 25 no. 6
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 12 March 2018

Ahmed Atef Oussii and Neila Boulila Taktak

The purpose of this paper is to investigate whether there is any relationship between the effectiveness of an audit committee and the financial reporting timeliness of…

Abstract

Purpose

The purpose of this paper is to investigate whether there is any relationship between the effectiveness of an audit committee and the financial reporting timeliness of Tunisian listed companies as proxied by external audit delay (AD). Analysis focuses on five audit committee characteristics: authority, financial expertise, independence, size and diligence.

Design/methodology/approach

Empirical tests address 162 firm-year observations drawn from Tunisian listed companies during 2011-2013.

Findings

Multivariate analyses indicate that audit committees with members who have financial expertise are significantly associated with shorter AD. Thus, the results suggest that audit committee financial expertise contributes to the improvement of financial statements’ timeliness.

Research limitations/implications

The audit committee attributes examined in this study were based on DeZoort et al. (2002) framework. There could be other aspects of audit committee effectiveness such as audit committee tenure and audit committee chair characteristics, which were not addressed in the present study. Thus, future research may consider and examine these other components of audit committee effectiveness.

Practical implications

Findings have managerial implications. Companies can re-look into how to further improve audit committee composition in order to enhance the timeliness of financial reporting. The issues of audit committee effectiveness and timely reporting also affect regulators and policy makers since they need to play a role in the establishment of effective audit committees and the improvement of financial reporting timeliness.

Originality/value

This study is one of few that have examined the impact of audit committee effectiveness on ADs in an emerging market country. Findings lend credence to the belief that audit committee members’ financial expertise enhances the quality of financial reporting by firms in a North African market criticized for the lack of maturity of its corporate governance system (Klibi, 2015; Fitch Ratings, 2009).

Details

African Journal of Economic and Management Studies, vol. 9 no. 1
Type: Research Article
ISSN: 2040-0705

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Article
Publication date: 24 July 2019

Noureddine Abouricha, Mustapha El Alami and Khalid Souhar

The purpose of this paper is to model the convective flows in a room equipped by a glass door and a heated floor of length l = 0.8 × H and submitted to a sinusoidal…

Abstract

Purpose

The purpose of this paper is to model the convective flows in a room equipped by a glass door and a heated floor of length l = 0.8 × H and submitted to a sinusoidal temperature profile and mono alternative temperature profile.

Design/methodology/approach

The paper opts for a numerical study of convective flows in a large scale cavity using the Lattice Boltzmann Method (LBM) by considering a two dimensions (2D) square cavity of side H and filled by air (Pr = 0.71). All the vertical walls, the ceiling and the rest of the floor are thermally insulated, the hot portion of length l = 0.8×H is heated with two imposed temperature profiles of amplitude values 0.2 ≤  a  ≤ 0.6 and for two different periods ζ = ζ0 and ζ = 0.4×ζ0. One of the vertical walls has a cold portion θc = 0 that represents the glass door.

Findings

A systematic study of the flow structure and heat transfer is carried out considering principal control parameters: amplitude “a” and period ζ for Rayleigh number Ra = 108. Effects of these parameters on results are presented in terms of isotherms, streamlines, profiles of velocities, temperature in the cavity, global and local Nusselt number. It has been found that an increase in amplitude or period increases the amplitude of the temperature in the core of cavity. The Nusselt number increases when the amplitude “a” of the imposed temperature increases, but this later is not affected by variation of the period.

Originality/value

The authors used LBM to simulate the convective flows in a cavity at high Ra, heated from below by tow imposed temperature profiles. Indeed, they simulate a local equipped by a solar water heater (SWH). The floor is subjected to a periodic heating: Sinusoidal heating (Case 1) for which the temperature varies sinusoidally (SWH without a supplement), and mono alternation heating (Case 2), the temperature evolves like a redressed signal (SWH with a supplement). The considered method has been successfully validated and compared with the previous work. The study has been conducted using several control parameters such as the signal amplitude and period in the case of turbulent convection. This allowed us to obtain a considerable set of results that can be used for engineering.

Details

International Journal of Numerical Methods for Heat & Fluid Flow, vol. 30 no. 5
Type: Research Article
ISSN: 0961-5539

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Article
Publication date: 30 October 2018

Giselle Durand

The purpose of this paper is to further the understanding of the determinants of audit report lag, which is the number of days from a company’s fiscal year-end to the date…

Abstract

Purpose

The purpose of this paper is to further the understanding of the determinants of audit report lag, which is the number of days from a company’s fiscal year-end to the date of its auditor’s report, by synthesizing extant literature. Audit report lag has been a variable of interest in many studies due to its use as a proxy for the occurrence of auditor-client management negotiations and audit efficiency and because long audit report lags delay the release of earnings information to the market.

Design/methodology/approach

The author uses meta-analysis to examine commonly identified predictors of audit report lag to determine if the prior research provides a consistent portrayal of audit report lag drivers.

Findings

The author finds that a number of variables relating to client profitability and financial condition, client complexity and audit opinion modifications increase audit report lag. In addition, audit report lag decreases with client size, when clients have positive earnings news to report and when the auditor has long tenure and provides non-audit services. Several variables, such as those relating to corporate governance and various auditor characteristics, have been little explored and would benefit from future research.

Originality/value

These results will be useful to researchers when selecting control variables for future audit report lag studies and provide insights into the key factors that contribute to the delay in audit reporting.

Details

Managerial Auditing Journal, vol. 34 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

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