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Article
Publication date: 21 May 2024

Mohamed M. El-Dyasty and Ahmed A. Elamer

This study aims to examine how female directors on corporate boards and audit committees, and auditor affiliations (Big 4 versus Egyptian firms affiliated with foreign auditors)…

Abstract

Purpose

This study aims to examine how female directors on corporate boards and audit committees, and auditor affiliations (Big 4 versus Egyptian firms affiliated with foreign auditors), influence audit fees. This examination is driven by the global call for increased female representation in leadership roles and its potential implications for audit quality and financial transparency.

Design/methodology/approach

A sample of non-financial companies listed on the Egyptian Stock Exchange is used for the period 2011–2020. The authors used multivariate regression models, the Heckman two-stage and tokenism to support the analysis.

Findings

The results are threefold. First, this analysis reveals that female directors, whether on corporate boards or audit committees, are more likely to choose higher-quality audits in the form of high audit fees. Second, both Big 4 firms and Egyptian audit firms affiliated with foreign auditors are positively associated with audit fees and earn significant audit fee premiums. Third, a minor difference in audit fee premiums could be attributed to the existence of female directors.

Research limitations/implications

Future research may expand the analysis performed in this study by investigating the characteristics related to female directors (e.g. education, experience and age) on audit fees.

Practical implications

This study suggests insights for regulatory bodies, corporate decision-makers, auditors and corporate governance researchers. For instance, this study reveals that the Big 4 are not homogenous and provide different audit quality levels along with significant audit fee premiums.

Originality/value

This study extends and contributes to the growing literature on female representation in corporate leadership. First, this study adds to the limited research in Egypt by examining the effect of female board representation on audit quality. Second, this study adds to the extant literature on the gender of financial experts by demonstrating that female financial expert is more likely to demand high-quality audits. Finally, the results have significant implications for policymakers. For instance, this study reveals that the Big 4 are not homogenous and provide different audit quality levels along with significant audit fee premiums.

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: 20 August 2020

Mohamed M. El-Dyasty and Ahmed A. Elamer

Although a number of studies suggest that big audit firms provide higher audit quality in strict legal environments, empirical evidence remains inconclusive. As little is known…

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Abstract

Purpose

Although a number of studies suggest that big audit firms provide higher audit quality in strict legal environments, empirical evidence remains inconclusive. As little is known about the effect of auditor type on audit quality in less strictly legal environments, this study aims to investigate the impact of auditor type on audit quality in the Egyptian market.

Design/methodology/approach

Data of Egyptian-listed companies during the period 2011–2018 are used. To examine the impact of auditor type on audit quality, ordinary least square regression and robust standard errors clustered at year and industry level are used. This study uses discretionary accruals as a proxy for audit quality. Several additional analyzes are conducted to assess the robustness of the main results, including alternative measures of audit quality and auditor type.

Findings

The results show that audit firms tend to provide higher audit quality when they are affiliated with a foreign audit firm. However, Big 4 auditors do not provide higher audit quality compare to their counterparts. Additionally, the governmental agency, accountability state authority, that monopolize audit function in state-owned companies do not appear to be associated with higher audit quality. Finally, local audit firms have a negative association with audit quality. This may be their strategy to secure future clients that seek low-quality audits.

Research limitations/implications

This study suggests that affiliation with foreign audit firms will help the Egyptian firms to develop their abilities by using advanced technology and techniques and transfer rare expertize to the Egyptian auditors. This study also shows that the strategy adopted by many Egyptian audit firms to affiliate with foreign auditors reflects the desire of these firms to be included in one tier alongside Big 4 audit firms to increase their market share under a claim of providing a higher audit quality.

Originality/value

This study adds to the rare but growing body of literature by investigating how auditor type affects audit quality in the context of less strictly legal environments. The results are important, as investors, standards-setters and regulators have growing concerns over audit quality since the Enron scandal. The findings suggest that audit quality depends on auditor type. These findings have important implications for investors, standards-setters and auditors interested in auditor oversight, audit quality and auditor choice.

Details

International Journal of Accounting & Information Management, vol. 29 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 30 November 2022

Mohamed M. El-Dyasty and Ahmed A. Elamer

Many countries are enacting regulations or/and recommendations to promote gender equality in the workplace, especially in the top leadership and management positions. However…

Abstract

Purpose

Many countries are enacting regulations or/and recommendations to promote gender equality in the workplace, especially in the top leadership and management positions. However, despite current research on gender diversity and firm outcomes, the authors know comparatively little about how different female leadership roles drive such outcomes. This study explores this notion in an emerging market by examining the effect of female leadership on financial reporting quality in Egypt.

Design/methodology/approach

This study uses multiple regression analyses for a sample of 1,686 firm-year observations listed on the Egyptian Stock Exchange over the period 2011–2020.

Findings

This study’s results show that female directors, female executives and females on audit committees are positively associated with financial reporting quality. Further, the results suggest that executive female directors are less involved in income decreasing earnings management practices. The findings are robust to possible omitted variables bias, alternative measurements and endogeneity issues. Taken together, the results are in line with the view that gender diversity is an effective monitoring instrument, which attenuates agency conflict and thus upholds financial reporting quality.

Research limitations/implications

Future research may expand the analysis performed in this study by using other proxies of financial reporting quality (e.g. earnings persistence, earnings predictability, conservatism and restatements). Also, the authors did not investigate the characteristics related to female directors (e.g. education, experience and age) due to data availability. Future research may examine the effect of these characteristics on female directors regarding financial reporting quality.

Practical implications

The evidence about the importance of female leadership in shaping financial reporting quality may inform future policy and regulatory initiatives.

Originality/value

This study contributes to the growing literature related to gender diversity. First, this study extensively investigates the leadership aspects related to female directors in both mentoring and executive positions. Second, the evidence reached is based on three different proxies of financial reporting quality. Thus, unlike previous studies, conclusions were reached based on a solid basis to support the reliability of the results. These findings should be of great interest to policymakers, academics and stakeholders.

Details

Journal of Applied Accounting Research, vol. 24 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 7 July 2023

Mohamed M. Eldyasty and Ahmed A. Elamer

This paper aims to examine the link between audit(or) type and restatements in Egypt, a complex and multifaceted auditing market. The usual big 4 versus non-big 4 comparison is…

Abstract

Purpose

This paper aims to examine the link between audit(or) type and restatements in Egypt, a complex and multifaceted auditing market. The usual big 4 versus non-big 4 comparison is insufficient as Egypt has a unique mix of private audit firms, one governmental agency (Accountability State Authority) and mandatory/nonmandatory audit services, including single, joint and dual audits.

Design/methodology/approach

The study uses a sample of listed companies in Egypt and analyzes the impact of auditor type and audit type on explicit, implicit and total restatements. The study uses logistic regression model to examine the underlying relationship.

Findings

Results show no relationship between auditor type and audit quality, positive association between non-big foreign CPA firms and total/implicit restatements and mixed results for the impact of dual audits on audit quality. The study found no link between auditor type and audit quality in Egypt. Egyptian audit firms linked to non-big 4 foreign Certified Public Accounting firms were positively linked to total and implicit restatements. Joint audits did not improve audit quality and were directly related to total and explicit restatements. Dual audits showed mixed results, positively associated with implicit restatements but inversely associated with explicit restatements.

Originality/value

The study provides valuable insights into the complexities of the auditing market in emerging markets and offers valuable insights for stakeholders in the financial statement users, audit firms and governmental agencies.

Article
Publication date: 5 December 2023

Saleh Aly Saleh Aly, Ahmed Diab and Samir Ibrahim Abdelazim

This study aims to investigate the impact of audit fees on audit quality, the impact of audit quality on firm value and whether these effects are conditional on audit tenure by…

Abstract

Purpose

This study aims to investigate the impact of audit fees on audit quality, the impact of audit quality on firm value and whether these effects are conditional on audit tenure by bringing evidence from an emerging market.

Design/methodology/approach

Different regression techniques are used, such as logistic regression, probit regression, ordinary least squares regression and fixed effects regression. The authors used panel data of 80 nonfinancial Egyptian-listed firms over 2016–2020.

Findings

The authors found a significant positive relationship between audit fees and audit quality and a significant positive relationship between audit quality and firm value. Furthermore, the authors found that the positive relationship between audit fees and audit quality is less pronounced for higher audit tenure firms. Finally, the authors also found that the positive relationship between audit quality and firm value is stronger for lower audit tenure firms.

Originality/value

To the best of the authors’ knowledge, this is the first study to bring evidence from an emerging African market about the joint association between audit tenure, audit fees, audit quality and firm value. It provides beneficial insights to regulators regarding the possibility and the benefits of improving audit quality, which is critically needed in contexts with weak governance systems.

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: 24 April 2024

Mohamed Moshreh Ali Ahmed, Dina Kamal Abd El Salam Ali Hassan and Nourhan Hesham Ahmed Magar

The purpose of this paper is to investigate whether audit committee characteristics, in particular audit committee size, audit committee activity and audit committee gender…

Abstract

Purpose

The purpose of this paper is to investigate whether audit committee characteristics, in particular audit committee size, audit committee activity and audit committee gender diversity, are associated with financial performance in Egyptian banks. The second purpose of this paper is to explore the moderating role of board gender diversity on the relationship between audit committee characteristics and financial performance.

Design/methodology/approach

A multiple regression analysis is used to estimate the moderating role of board gender diversity on the relationship between audit committee characteristics and financial performance of a sample of Egyptian banks during the period between 2018 and 2022.

Findings

The results indicate that audit committee size has a negative and insignificant effect impact on return on assets (ROA) and return on equity (ROE), respectively. The results also indicate that the audit committee gender diversity has a significant positive impact on ROA and ROE, respectively. Regarding audit committee activity, the number of board meetings has a negative and insignificant effect on ROA and ROE, respectively. Regarding gender diversity as a moderating variable, in general there is a positive effect of gender diversity on the relationship between audit committee characteristics and financial performance.

Research limitations/implications

The study was limited to 20 banks in one country, but it sets the tone for future empirical research on this subject matter. The study also relied on one moderating variable, which is board gender diversity. This study provides an avenue for future research in the area of corporate governance and financial performance in other emerging countries, especially other African countries.

Practical implications

This study provides useful insights for managers and policymakers to better understand which audit committee characteristics can best encourage a company to improve financial performance. Furthermore, regulators should ensure that banks strictly adhere to corporate governance principles to build a strong banking industry capable of achieving economic development.

Social implications

Banks will benefit equally from valuable qualities across demographic groupings in society by having females on the audit committee and appropriate audit committee meetings. Additionally, if audit committee members are correctly selected, banks with more females in audit committee and suitable audit committee meetings can successfully contribute to strengthening financial performance and social welfare of diverse segments of society. A culture of good banking governance must emerge to improve bank financial stability and, as a result, greater stability and economic growth.

Originality/value

To the best of the authors’ knowledge, the study is, perhaps, the first to examine the moderating role of board gender diversity on the relationship between audit committee characteristics and financial performance in Egyptian banks. This study adds to the literature by investigating such an issue in a developing economy that operates in a different context than those in developed countries.

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: 20 June 2022

Mohamed Khaled Eldaly, Ahmed A. Elamer and Magdy Abdel-Kader

This study aims to examine the effects of the entry of foreign direct investments (FDIs) on the audit markets in developing countries (i.e. Egypt). There is a long-standing debate…

Abstract

Purpose

This study aims to examine the effects of the entry of foreign direct investments (FDIs) on the audit markets in developing countries (i.e. Egypt). There is a long-standing debate on the impact of FDIs on developing markets, but little is still known about the effect of FDI on national suppliers, such as audit firms.

Design/methodology/approach

This paper reports the results of a study that used qualitative research methods. It involves interviews with senior management teams of the Big 4 audit firms, to find out how these firms deal simultaneously with conflicting global and local influences. The interviews were complemented by the publicly available data on the firms’ websites as well as published reports related to the Egyptian economy and current investment regulations.

Findings

Drawing on the institutional theory, the findings suggest that an increased litigious environment, compliance with developed markets’ regulations, auditor regulatory sanctions and improved local accounting and auditing standards are highly significant consequences of foreign investment inflows. The findings indicate that more emphasis has been given to the quality of audit and auditors’ independence when auditing FDIs. Both audit regulators and audit firms in the domestic market pay higher attention to improving the quality of financial reports when FDIs have entered the market. More inspections and reviews for audit firms have been conducted, and local auditing and accounting standards have been revised to be in compliance with international standards.

Research limitations/implications

Our results have important implications for investors, regulatory authorities and governments in relation to the development, implementation and enforcement of international financial reporting and auditing standards.

Originality/value

Policymakers and regulators in Egypt have responded to international pressure by revitalizing their local accounting and auditing standards and adopting international financial reporting and auditing standards. The authors identify strategies that have been adopted by audit firms to face the FDIs’ challenges.

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: 5 September 2023

Inas Mahmoud Hassan, Hala M.G. Amin, Diana Mostafa and Ahmed A. Elamer

This study aims to examine the role of the board of directors in affecting earnings management practices across small- and medium-sized enterprises (SMEs) life cycle.

Abstract

Purpose

This study aims to examine the role of the board of directors in affecting earnings management practices across small- and medium-sized enterprises (SMEs) life cycle.

Design/methodology/approach

Data is collected from 280 SMEs listed on the London Stock Exchange during the period of 2009–2016. Fixed effects regression analysis is used to test the hypotheses.

Findings

This study shows that the impact of the board of directors' roles on earnings management practices varies depending on the SMEs life cycle stage. In the introduction, growth and decline stages of SMEs, the wealth creation role of the board is negatively significant with earnings management, while the wealth protection role of the board is positively significant in the growth and maturity phases. Results suggest that the board's responsibility to create wealth deters early-stage earnings management strategies, while protecting shareholder interests, in latter stages, leads to a decrease in earnings management.

Practical implications

The findings suggest that corporate governance should be customized to the specific stage of the SMEs life cycle. Additionally, different life cycle stages may impose different requirements on corporate boards to shape the effectiveness of these mechanisms and constrain earnings management practices.

Originality/value

To the best of the authors’ knowledge, this study offers one of the first insights on the UK SMEs to understand how board functions and earnings management practices vary over SMEs life cycles. It will offer important information on the effect of board features on earnings management in SMEs in the UK and is anticipated to be of importance to policymakers, regulators, investors and practitioners.

Details

International Journal of Accounting & Information Management, vol. 31 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 14 February 2022

Saleh F.A. Khatib, Dewi Fariha Abdullah, Ahmed Elamer and Saddam A. Hazaea

This study aims to provide a comprehensive review of the existing literature on corporate governance (CG) aspects of the Malaysian market. It offers insights into the phases of…

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Abstract

Purpose

This study aims to provide a comprehensive review of the existing literature on corporate governance (CG) aspects of the Malaysian market. It offers insights into the phases of Malaysian CG, identifies crucial gaps in the literature and outlines an agenda for impending research.

Design/methodology/approach

Following a systematic literature review approach, a final sample of 125 studies from Scopus and Web of Science databases was used in this study. These studies were selected based on quality assessment criteria. Then, the sample literature was evaluated in terms of journals, methodology, theories, modelling, research outcomes and CG characteristics.

Findings

The results show that there is a growing interest among researchers to further explore CG aspects in Malaysia due to the continuous development of the Malaysian CG codes. Likewise, the review reveals that the majority of prior studies are quantitative and were carried out using archived data from non-financial firms. Also, the existing literature has primarily focused on the outcomes of CG, especially firm performance.

Research limitations/implications

Overall, the results show that there is ample room for future research. The present paper identifies a number of methodological problems and concerns, and discusses the implications of these problems, while also providing recommendations for future research. The main caveat is that the authors use scholarly papers published in academic journals only, but this approach offers them with opportunities for considerable further developments.

Originality/value

To the best of the authors’ knowledge, this study contributes to the literature by being the first of its kind to concentrate on the Malaysian context. It provides a comprehensive knowledge assessment of the Malaysian CG research and offers advice regarding improvements in research, policy and practice by identifying possible knowledge gaps. Consequently, this study provides a cohesive story of the past and a road map for future research on Malaysian CG.

Details

Corporate Governance: The International Journal of Business in Society, vol. 22 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 12 May 2022

Mahlaximi Adhikari Parajuli, Mehul Chhatbar and Abeer Hassan

This study aims to measure the relationship between corporate governance and non-financial reporting (NFR) in higher education institutions (HEIs). Board effectiveness, student…

Abstract

Purpose

This study aims to measure the relationship between corporate governance and non-financial reporting (NFR) in higher education institutions (HEIs). Board effectiveness, student engagement, audit quality, Vice-Chancellor (VC) pay and VC gender are targeted for analysis.

Design/methodology/approach

This study is based on content analysis. The authors used the EU NFR Directive (2014/95/EU) to measure NFR. This includes environmental, corporate social responsibility, human rights, corporate board effectiveness and corruption and bribery. Cross-sectional data was collected from 89 HEIs worldwide across 15 different countries over three years. Content analysis, the weighted scoring method and panel data analysis are used to obtain the results.

Findings

Through a neo-institutional theoretical lens, this study provides a broader understanding of NFR content disclosure practices within HEIs. The findings reveal that the audit quality, VC pay and VC gender are significantly and positively associated with NFR content disclosure. However, board effectiveness has a significant negative impact on NFR content disclosure. More interestingly, the findings reveal that student engagement has an insignificant association with NFR content disclosure and there significant difference on the level of NFR content disclosure across universities situated in the different geographical region such as the USA, Australia, the UK and EU, Asia and Canada. The findings have important implications for regulators and policymakers. The evidence appears to be robust when controlling for possible endogeneities.

Originality/value

The study contributes to the literature on corporate non-financial disclosure as it provides new insights of corporate governance mechanisms and NFR disclosure within HEIs.

Details

Meditari Accountancy Research, vol. 31 no. 4
Type: Research Article
ISSN: 2049-372X

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