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Article
Publication date: 2 July 2018

Muhammad Jahangir Ali, Rajbans Kaur Shingara Singh and Mahmoud Al-Akra

The purpose of this study is to examine the impact of audit committee effectiveness on audit fees and non-audit service (NAS) fees in a less regulatory environment.

1466

Abstract

Purpose

The purpose of this study is to examine the impact of audit committee effectiveness on audit fees and non-audit service (NAS) fees in a less regulatory environment.

Design/methodology/approach

The authors construct a composite audit committee effectiveness measure incorporating audit committee independence, diligence, size, financial expertise and the chairperson’s accounting expertise.

Findings

The authors find that audit committee effectiveness has a positive significant impact on both audit fees and NAS fees. This suggests that effective audit committees can hold auditors accountable resulting in better audit quality and consequently higher audit fees.

Originality/value

The link between more effective audit committees with higher NAS purchases can be explained in light of the difference in regulatory requirements providing audit committees with decision rights on the use of NASs, therefore approving more NAS and increasing NASF. Additional tests and robustness analyses confirm the results.

Details

Accounting Research Journal, vol. 31 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 27 September 2019

Noorul Azwin Binti Md Nasir, Muhammad Jahangir Ali and Kamran Ahmed

This study aims to examine the relationship between the presence of a Malay director on the board and financial statement fraud in Malaysia. Further, the authors…

1411

Abstract

Purpose

This study aims to examine the relationship between the presence of a Malay director on the board and financial statement fraud in Malaysia. Further, the authors investigate whether financial statement fraud firms improve their governance mechanisms compared to non-fraud firms subsequent to the fraud year.

Design/methodology/approach

The authors use hand-collected data comprising 76 financial statement fraud and 76 non-fraud firms over a period of eight years from 2001 to 2008.

Findings

Using a univariate and logistic regression model, the results demonstrate a significant positive relationship between the proportion of Malay directors on the board and the financial statement fraud. The authors also find that fraud firms significantly increase the proportion of independent directors on their boards, increase the frequency of board and audit committee meetings and reduce duality subsequent to the detection of financial statement fraud compared to the non-fraud firms.

Originality/value

The findings of the study are useful to policy-makers, regulators, firms and investors.

Details

Accounting Research Journal, vol. 32 no. 3
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 1 October 2018

Noorul Azwin binti Md Nasir, Muhammad Jahangir Ali, Rushdi M.R. Razzaque and Kamran Ahmed

We examine whether the fraud firms are engaged in real earnings management and accrual earnings management prior to the fraud year in the Malaysian context.

2360

Abstract

Purpose

We examine whether the fraud firms are engaged in real earnings management and accrual earnings management prior to the fraud year in the Malaysian context.

Design/methodology/approach

Our sample comprises of 65 financial statement fraud and 65 non-fraud firms over a period of eight years from 2001 to 2008.

Findings

Using the abnormal cash flow from operations (CFO) and abnormal production costs as the proxies for real earnings management, we find that financial statement fraud firms engage in manipulating production costs during preceding two years of the fraud event. However, our results show that financial fraud firms engage in manipulating CFO prior to the fraud event. Additionally, we find that financial statement fraud firms prefer to manipulate earnings using accruals relative to real earnings prior to the fraud year.

Originality/value

Our results demonstrate that real earnings management is more aggressive in financial statement fraud firms compared to the non-fraud firms in the four years prior to fraud.

Details

International Journal of Accounting & Information Management, vol. 26 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 6 November 2017

Muhammad Jahangir Ali and Kamran Ahmed

The purpose of this paper is to examine the determinants of accounting policy choices under International Accounting Standards (IASs) of listed firms in South Asia.

4924

Abstract

Purpose

The purpose of this paper is to examine the determinants of accounting policy choices under International Accounting Standards (IASs) of listed firms in South Asia.

Design/methodology/approach

We selected three IASs-based accounting policy choices from 369 listed companies in India, Pakistan and Bangladesh for the financial year 2007-2008.

Findings

Our results show that firm size, investment opportunity set, leverage and ownership by the general public are significant determinants of accounting policy choice in South Asian countries. However, we do not find a significant relationship between firms’ accounting policy choices and profitability, assets-in-place and taxes.

Practical implications

Our results suggest that as some flexibility exists in IASB’s accounting standards, this may allow managers to use income-increasing/decreasing methods. There is scope for regulators and standards setters to reduce the alternative methods which are likely improve firms’ reporting quality.

Originality/value

Our study contributes to the understanding as to what determines managers’ choice of a particular accounting method allowed in IAS.

Details

Accounting Research Journal, vol. 30 no. 4
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 21 January 2021

Oheneba Assenso-Okofo, Muhammad Jahangir Ali and Kamran Ahmed

The study examines whether corporate governance moderates the relationship between CEO compensation and earnings management.

Abstract

Purpose

The study examines whether corporate governance moderates the relationship between CEO compensation and earnings management.

Design/methodology/approach

The study uses 1,800 firm-year observations from 2005 to 2010 and employ multiple regression analyses and other sensitivity tests.

Findings

The study finds a positive relationship between CEO compensation and earnings management. The study’s results also suggest that CEO bonus compensation increases in relation to earnings management and therefore the study infers that managers may become involved in earnings management to increase their compensation. However, the study finds that the relationship is moderated by a strong corporate governance system which reduces the impact of earnings management on CEO compensation.

Research limitations/implications

The study is conducted in a specific context, and therefore it may be subject to a set of limitations. The study emphasises exclusively on whether executives manage earnings to increase their compensation. The study does not consider the issue of several other and potentially contradictory motivations here.

Practical implications

The study’s findings highlight potential implications and offer useful propositions for stakeholders, particularly accounting and corporate governance regulators, to consider. The findings offer a basis for the accounting professions to further discuss and improve accounting standards to provide adequate regulations and monitoring to decrease managerial opportunistic behaviours in earnings manipulations. The findings also emphasise the need for appropriately designed CEO compensation packages in such a manner that improves the manager–shareholder alignment and reduces the information asymmetry problem. The results signify that corporate governance plays a vital role in mitigating the relationship between CEO compensation and earnings management.

Originality/value

This study adds to the existing literature by documenting empirical support on the link between earnings management and CEO compensation against a backdrop of high demand for strong corporate governance practices.

Details

Journal of Applied Accounting Research, vol. 22 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 27 March 2020

Oheneba Assenso-Okofo, Muhammad Jahangir Ali and Kamran Ahmed

This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically…

1096

Abstract

Purpose

This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically, the authors examine whether the recent financial crisis had moderated the relationship between CEO bonus and discretionary accruals.

Design/methodology/approach

The authors use panel data for 1,800 firm-year observations (over a period of six years from 2005 to 2010) and use univariate and multivariate tests to test their hypothesis. The authors divide the period into pre-crisis, during-crisis and post-crisis periods to examine how the different financial crisis periods affect the relationship between CEO compensation and earnings management. Various alternative tests including endogeneity test suggest that the results are robust.

Findings

The authors’ multivariate results indicate that the relationship between CEO’ compensation and earnings management changes because of the GFC.

Practical implications

The findings, therefore, justify more monitoring and scrutiny to limit the existence of opportunistic managerial behaviour and for the appropriate designing of CEO compensation packages during abnormal economic circumstances.

Originality/value

So far as the authors’ knowledge goes, this is the first study which examines the relationship between CEO compensation and earnings management during GFC.

Details

International Journal of Accounting & Information Management, vol. 28 no. 2
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 5 October 2015

Kamran Ahmed and Muhammad Jahangir Ali

This paper aims to examine whether the level of harmonization of accounting measurement practices in three South Asian countries – Bangladesh, India and Pakistan – has…

1414

Abstract

Purpose

This paper aims to examine whether the level of harmonization of accounting measurement practices in three South Asian countries – Bangladesh, India and Pakistan – has improved since 1998 as a result of the changes, in recent years, globally in accounting measurement practices due to the substantial efforts of the International Accounting Standards Board (IASB). South Asian countries have taken a number of steps and made changes in accounting regulations to support the IASB’s harmonization programme.

Design/methodology/approach

In all, 370 non-financial companies for the financial years 1997-1998 and 2007-2008 were used, and consistent with Ali et al. (2006), Van der Tas’s (1988) I index and Archer et al.’s (1995) modified C index were used to measure the extent of harmonization.

Findings

It was found that the level of measurement harmonization has significantly improved over the years in selected South Asian countries.

Originality/value

The results suggest that the harmonization of accounting will most likely ensure a greater level of transparency and uniformity in corporate reporting practices (measurement) in South Asian countries and throughout the world as promoted by the IASB.

Details

International Journal of Accounting & Information Management, vol. 23 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 17 May 2013

Zhuoming Wang, Muhammad Jahangir Ali and Mahmoud Al‐Akra

The purpose of this study is to examine whether the level of voluntary disclosure affects firm value in the Chinese capital market. It also investigates whether voluntary…

2000

Abstract

Purpose

The purpose of this study is to examine whether the level of voluntary disclosure affects firm value in the Chinese capital market. It also investigates whether voluntary disclosure and the values of Chinese firms are influenced by the global financial crisis (GFC).

Design/methodology/approach

The study used a sample of 714 firm‐year annual reports of listed companies on the Shanghai and Shenzhen Stock Exchanges over a period of five years from 2005 to 2009 and adopt a two‐stage OLS (2SLS) procedure.

Findings

It is found that the extent of voluntary disclosure has improved in China during the period studied. The multiple regression results indicate that more voluntary disclosure does not create value for Chinese firms. It is also observed that multinational ownership, non‐executive directors, and audit committee presence are positively and significantly associated with voluntary disclosure. Furthermore, the study reports that state and individual ownerships are negatively associated with firm value while multinational ownership and liquidity have a positive significant association with firm value. During the financial crisis, voluntary disclosure continues to increase, however, firm value has decreased.

Originality/value

Using data from the Chinese market, the study fills a research gap by examining the value relevance of voluntary disclosure and tests whether the Global Financial Crisis has influenced voluntary disclosure levels and Chinese firms' values.

Details

Managerial Auditing Journal, vol. 28 no. 5
Type: Research Article
ISSN: 0268-6902

Keywords

Book part
Publication date: 1 December 2009

Muhammad Jahangir Ali, Kamran Ahmed and Ian A. Eddie

Purpose – The purpose of this study is to empirically examine the extent of adoption of International Financial Reporting Standards (IFRS) within three major South Asian…

Abstract

Purpose – The purpose of this study is to empirically examine the extent of adoption of International Financial Reporting Standards (IFRS) within three major South Asian countries – India, Pakistan and Bangladesh.

Design/methodology/approach – We selected 566 non-financial listed companies for the financial year 1997–1998. Fifty-two measurement practices and 72 disclosure practices were drawn from 15 commonly adopted IFRS.

Findings – We find that the overall level of adoption of IFRS regarding measurement and disclosure practices is higher in Pakistan compared with India and Bangladesh. We also find that the adoption level is high for inventories, income statement for the period, research and development costs, retirement benefit costs, foreign currency translations, business combination and accounting for investment in associates, whereas the adoption level is low in the areas of cash flow statements, taxes on income, property, plant and equipment, accounting for leases, accounting for government grants, borrowing costs and consolidated financial statements.

Originality/value – Adoption of IFRS issued by the International Accounting Standards Board (IASB) by listed companies has been a subject of immense interest among accounting standard setters, practitioners and academics throughout the world. South Asian countries have adopted IFRS, either fully or with minor modifications, with a view to improving the quality of financial reporting. This article is one of few that examines this important issue and concludes with some suggestions for improving the adoption levels within South Asia.

Details

Accounting in Emerging Economies
Type: Book
ISBN: 978-1-84950-626-7

Article
Publication date: 22 February 2013

Kamran Ahmed and Muhammad Jahangir Ali

The purpose of this paper is to examine the determinants of analysts' operating cash flow forecasts of Australian listed firms and whether or not such forecasts improve…

2598

Abstract

Purpose

The purpose of this paper is to examine the determinants of analysts' operating cash flow forecasts of Australian listed firms and whether or not such forecasts improve the usefulness of earnings and predictive ability of current cash flows.

Design/methodology/approach

The authors used a large sample of firms for which both cash flows and earnings forecasts were available over a period between 1993 and 2003, and employed both univariate and logistic regression analyses.

Findings

It was found that analysts forecast both operating cash flows and earnings when the firms are more complex in operations and when the size of the firm is relatively small. Further, it was found that cash flow forecasts improve the usefulness of earnings and predictive ability of current cash flows.

Originality/value

This study contributes to current understanding of analysts' forecast behaviour regarding dissemination of operating cash flow information and usefulness of cash flow forecasts.

Details

International Journal of Accounting & Information Management, vol. 21 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

1 – 10 of 31