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Article
Publication date: 7 October 2019

Eko Suyono and Omar Al Farooque

This study aims to investigate the effects of intellectual intelligence, emotional intelligence, internal locus of control, and auditors’ experience (intrinsic…

Abstract

Purpose

This study aims to investigate the effects of intellectual intelligence, emotional intelligence, internal locus of control, and auditors’ experience (intrinsic characteristics) and organizational culture (an extrinsic characteristic) on auditors’ professionalism.

Design/methodology/approach

Data are collected from auditors working in public accounting firms in the Central Java and Yogyakarta provinces of Indonesia between March 1 and June 30, 2017, using survey questionnaires with a Likert scale (one-five). The ordinary least squares (OLS) regression method is used to analyze the data.

Findings

Findings from OLS regression reveal that emotional intelligence, internal locus of control and auditors’ experience positively influence auditors’ professionalism. However, intellectual intelligence and organizational culture do not show any effect on their professionalism.

Originality/value

Even though there are some limitations, such as how to measure intellectual intelligence, and the relatively small size of the sample, this study makes a significant contribution because it is the first study to measure the joint effect of both intellectual and emotional intelligence and the first to examine the influence on auditors’ professionalism of both individual and organizational characteristics.

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Article
Publication date: 15 January 2020

Omar Al Farooque, Wonlop Buachoom and Lan Sun

This study aims to investigate the effects of corporate board and audit committee characteristics and ownership structures on market-based financial performance of listed…

Abstract

Purpose

This study aims to investigate the effects of corporate board and audit committee characteristics and ownership structures on market-based financial performance of listed firms in Thailand.

Design/methodology/approach

It applies system GMM (generalized method of moments) as the baseline estimator approach, and ordinary least squares and fixed effects for robustness checks on a sample of 452 firms listed on the Thai Stock Exchange for the period 2000-2016.

Findings

Relying mainly on the system GMM estimator, the empirical results indicate some emerging trends in the Thai economy. Contrary to expectations for an emerging market and prior research findings, ownership structures, particularly ownership concentration and family ownership, appear to have no significant influence on market-based firm performance, while managerial ownership exerts a positive effect on performance. Moreover, as expected, board structure variables such as board independence; size; meeting and dual role; and audit committee meeting show significant explanatory power on market-based firm performance in Thai firms.

Practical implications

These findings are important for policymakers in constructing an appropriate set of governance mechanisms in an emerging market context, and for corporate entities and investors in shaping their understanding of corporate governance in the Thai institutional context.

Originality/value

Unlike previous literature on the Thai market, this study is the first to use the more advanced econometric method known as system GMM estimator for addressing causality/endogeneity issues in governance–performance relationships. The findings indicate new trends in the explanatory power of ownership structure variables on market-based firm performance in Thai-listed firms.

Details

Pacific Accounting Review, vol. 32 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

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Article
Publication date: 2 October 2017

Mohammed Hossain, Omar Al Farooque, Mahmood Ahmed Momin and Obaid Almotairy

This paper aims to investigate the relationship between gender diversity and the Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant…

Abstract

Purpose

This paper aims to investigate the relationship between gender diversity and the Carbon Disclosure Project (CDP) score/index. Specifically, the study describes extant research on theoretical perspectives, and the impact of women on corporate boards (WOBs) on carbon emission issues in the global perspective.

Design/methodology/approach

This study uses the carbon disclosure scores of the CDP from 2011 to 2013 (inclusive). A total observation for the three-year periods is 1,175 companies. However, based on data availability for the model, the sample size totals 331 companies in 33 countries with firms in 12 geographical locations. The authors used a model which is estimated using the fixed-effects estimator.

Findings

The outcomes of the study reveal that there is a positive relationship between gender diversity (WOB) and carbon disclosure information. In addition to establishing a relationship between CDP score and other control variables, this study also found a relationship with Board size, asset size, energy consumption and Tobin’s Q, which is common in the existing literature.

Research limitations/implications

The limitations of the study mostly revolve around samples and the time period. To further test the generalizability and cross-sectional validity of the outcomes, it is suggested that the proposed framework be tested in more socially responsible firms.

Practical implications

There are increasing pressures for WOBs from diverse stakeholders, such as the European Commission, national governments, politicians, employer lobby groups, shareholders, Fortune and Financial Times Stock Exchange (FTSE) rankings and best places for women to work lists. The study offers insights to policy makers implementing gender quota legislation.

Originality/value

The study has important implications for putting into practice good corporate governance and, in particular, gender diversity. The outcomes of the analyses advocate that companies that included women directors and had a smaller board size may expect to achieve a higher level of carbon emission performance and to voluntarily disclose the level of carbon information assessment requested by the CDP.

Details

Social Responsibility Journal, vol. 13 no. 4
Type: Research Article
ISSN: 1747-1117

Keywords

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Article
Publication date: 28 May 2020

Mohd Shukor Harun, Khaled Hussainey, Khairul Ayuni Mohd Kharuddin and Omar Al Farooque

This study aims to explore the corporate social responsibility disclosure (CSRD) practices of the Islamic banks in the Gulf Cooperation Council (GCC) countries during the…

Abstract

Purpose

This study aims to explore the corporate social responsibility disclosure (CSRD) practices of the Islamic banks in the Gulf Cooperation Council (GCC) countries during the period 2010-2014 and examines the determinants of CSRD and its effects on firm value.

Design/methodology/approach

Based on the Accounting and Auditing Organization for Islamic Financial Institutions Governance Standard No. 7 guidelines and using content analysis, the paper develops a comprehensive CSRD index for GCC Islamic banks. The study applies ordinary least squares regression analysis for hypothesis testing and for finding determinants of respective dependent variables.

Findings

The results show a very low level of CSRD among the sample Islamic banks in GCC countries. When using corporate governance characteristics to examine the determinants of CSRD, this study provides evidence of a significant positive association between board size and CSRD practice in Islamic banks and a significant negative relationship of chief executive officer (CEO) duality with CSRD, as per expectation. For the economic consequences of CSRD, the study documents an inverse performance effect of CSRD while board size, board composition and CEO duality indicate significant positive effects on firm value.

Research limitations/implications

The relatively small sample size of GCC Islamic banks may limit the application of the findings to other Islamic financial institutions such as Takaful and the Islamic unit trust company.

Practical implications

The findings of this study initiate the global debate on the need for corporate governance reform in Islamic banks by providing insights on the role played by corporate governance mechanisms in encouraging and enhancing CSRD practices among Islamic banks. The findings also have important implications for investors, managers, regulatory bodies, policymakers and Islamic banks in the GCC countries.

Social implications

The results of the study do not support the idea that Islamic banks operating on Islamic principles can meet their social responsibilities through promoting corporate social responsibility (CSR) activities and by differentiating themselves from non-Islamic banks.

Originality/value

This is the first study to examine the determinants of CSRD in GCC Islamic banks using comprehensive CSRD and corporate governance variables and, therefore, adds value to the existing CSR literature in banking.

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Article
Publication date: 14 September 2010

Omar Al Farooque, Tony van Zijl, Keitha Dunstan and Akm Waresul Karim

The purpose of this paper is to test whether dominant shareholder(s) of a firm enhance performance in Bangladesh and thus examines the arbitrary moves by the regulatory…

Abstract

Purpose

The purpose of this paper is to test whether dominant shareholder(s) of a firm enhance performance in Bangladesh and thus examines the arbitrary moves by the regulatory bodies, in the name of promoting “good corporate governance”, to restrict ownership concentration.

Design/methodology/approach

Building on the established literature, a simultaneous equations approach is applied to model the relationship between ownership concentration and performance and is tested on a sample of 567 observations on firms listed on the Dhaka Stock Exchange over a seven‐year period. The two equations model consists of firm performance and ownership concentration as endogenous variables along with other governance variable.

Findings

The results suggest a significant positive co‐deterministic relationship between ownership concentration and firm performance indicating that ownership concentration and firm performance simultaneously impact each other. It suggests that the ownership restriction imposed by the Securities and Exchange Commission is unjustified and detrimental to firm performance/growth in emerging countries such as Bangladesh.

Practical implications

This new evidence from an emerging market enhances our understanding of corporate governance in Asian countries. The study has implications for stakeholders, regulators and policy makers to revisit their attempt to limit founder‐family ownership holdings. Instead, their aim should be to balance the home‐grown unique features, such as a Top‐1 dominant shareholder, with Western governance mechanisms.

Originality/value

The paper is the first to consider Top 1 shareholder's ownership as the measure of ownership concentration, which is an important feature of the corporate sector in emerging markets. In emerging markets, founder‐family ownership concentration acts as an alternative governance mechanism substituting for strong and effective legal backing and other market‐driven monitoring mechanisms.

Details

Accounting Research Journal, vol. 23 no. 2
Type: Research Article
ISSN: 1030-9616

Keywords

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Article
Publication date: 5 March 2018

Lan Sun and Omar Al Farooque

This study aims to explore corporate earnings management practices in Australia and New Zealand before and after the regulatory changes and corporate governance reforms…

Abstract

Purpose

This study aims to explore corporate earnings management practices in Australia and New Zealand before and after the regulatory changes and corporate governance reforms. The study argues that the effectiveness of regulatory reforms has to be reflected in constraining earnings management in post-reform period as compared to pre-reform period.

Design/methodology/approach

Using a sample of 3,966 firm-year observations, including all ASX and NZX listed firms for the period 2001-2006, the study examines earnings management practices in both countries in pre- and post-reform periods with appropriate statistical methods.

Findings

The results indicate some interesting phenomenon: the magnitude of earnings management did not decline after the governance reform as a positive time trend is observed in the entire sample as well as in Australian and New Zealand sub-samples, suggesting that earnings management has been growing over time. Additional test indicates no structural change has occurred before and after the new regulations. The shifting from decreasing earnings management to increasing earnings management can be interpreted as an evidence that earnings become more ‘informative’ in a more transparent disclosure regime to capture short-run benefits from regulator reforms.

Research limitations/implications

The shifting of earnings management behaviour from decreasing to increasing income can be interpreted as the outcome of more “informative”, rather than “deliberate”, earnings management in a more transparent disclosure regime to capture short-run benefits of regulatory reforms, which is worth further investigation. The findings of the study can lead regulatory authorities taking appropriate measures to promote earnings quality in corporate financial reporting from a long-run decision usefulness context. Any future reforms should be directed to protecting the interest of stakeholders as well as ensuring benefits outweighing costs for them.

Practical implications

The findings of the study can lead regulatory authorities in taking appropriate measures to promote earnings quality in corporate financial reporting from a long-run decision usefulness context.

Originality/value

The study adds value to the existing earnings management literature as well as effectiveness of regulations for the benefit of wider stakeholder groups.

Details

International Journal of Accounting & Information Management, vol. 26 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 3 September 2018

Eko Suyono and Omar Al Farooque

This study aims to investigate the influences of corporate governance mechanisms on earnings management practices and corporate social responsibility (CSR) disclosure, at…

Abstract

Purpose

This study aims to investigate the influences of corporate governance mechanisms on earnings management practices and corporate social responsibility (CSR) disclosure, at the manufacturing companies listed on the Indonesian Stock Exchange. The authors consider the moderating effect of earnings management on the relationship between governance mechanisms and CSR.

Design/methodology/approach

Insights are drawn from five years company data generated between 2010 and 2014, thus covering a five-year period. Ordinary least squares (OLS) regression analysis is applied to test the hypotheses developed.

Finding

OLS regression results indicate that institutional ownership, managerial ownership and independent boards have a significant deterrent effect on earnings management, while institutional ownership and board of directors have significant positive impact on CSR. Moreover, OLS results reveal a strong moderation effect of earnings management and a positive link between governance and CSR.

Originality/value

These findings have significant policy implications for public policy, regulatory bodies, companies and other stakeholders including the investors in Indonesia. Insights from this study will help to shape and implement an optimal governance system that can address the problem of earnings management and CSR initiatives in Indonesian companies.

Details

Accounting Research Journal, vol. 31 no. 3
Type: Research Article
ISSN: 1030-9616

Keywords

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Article
Publication date: 2 May 2017

Omar Al Farooque and Helena Ahulu

This paper aims to provide new insights on the determinants of social and economic sustainability reportings of multinational enterprises (MNEs) in three Anglo-Saxon…

Abstract

Purpose

This paper aims to provide new insights on the determinants of social and economic sustainability reportings of multinational enterprises (MNEs) in three Anglo-Saxon countries, mainly Australia, the UK and South Africa, from the perspective of corporate governance, stakeholder and corporate legitimacy.

Design/methodology/approach

This paper examines stand-alone sustainability reports of 67 large MNEs from three countries available in the Global Reporting Initiative (GRI) website for the period of 2008-2009. It undertakes two distinct methodological approaches: first, principal component analysis (PCA) of GRI guidelines (G3) on social and economic indicators to identify the most appropriate dependent variables, and second, hierarchical multiple regression for the hypotheses testing and finding determinants of respective dependent variables on social and economic reportings.

Findings

The results from the PCA of GRI guidelines (G3) provide an alternative way of categorizing the social and economic indicators when compared to the categories given by the GRI. Again, the results from hierarchical multiple regression indicate the industry sector as the dominant determinant of social and economic reportings. In particular, the positive, significant association of board independence, assurance and employee performance variables with economic reporting confirms the significant roles of corporate governance, stakeholders and corporate legitimacy in determining economic reporting. The findings also suggest the complementary nature of relevant theories in corporate voluntary disclosures relating to economic performance. However, social reporting shows no such relations, which rather relies more on firm-specific/financial variables of MNEs including firm size and age.

Research limitations/implications

The sample of this study is limited to two-year periods and large MNEs available in the GRI website with stand-alone sustainability reports only.

Practical implications

The PCA focuses on most relevant and specific categories of social and economic reportings as opposed to GRI generic categories. The PCA findings also suggest the GRI to contemplate reducing the social and economic indicators for future guidelines. The hierarchical multiple regression results highlight specific areas of emphasis that MNEs should focus on when reporting social and economic information.

Originality/value

This study adds value to the existing literature on GRI-based social and economic reportings as well as the complementary nature of corporate governance, stakeholders and corporate legitimacy perspectives.

Details

International Journal of Accounting & Information Management, vol. 25 no. 2
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 28 September 2012

Sabur Mollah, Omar Al Farooque and Wares Karim

In spite of an abundance of corporate governance literature across the world, the Botswana corporate sector is lacking. The purpose of this study is to investigate the…

Abstract

Purpose

In spite of an abundance of corporate governance literature across the world, the Botswana corporate sector is lacking. The purpose of this study is to investigate the relationship among the ownership structure, board characteristics and financial performance to determine the role of corporate governance in the performance behavior of companies listed in such an emerging market in Africa as Botswana.

Design/methodology/approach

Ordinary least square (OLS) models are applied to Botswana Stock Exchange listed firms over the period 2000‐2007 to determine the role of corporate governance in the performance behavior of companies listed in an emerging market.

Findings

The empirical evidence shows distinct nature of corporate governance behavior among alternative performance measures used, in particular, between accounting‐based/hybrid and market‐based measures.

Practical implications

Such diversified findings provide the policy‐makers with insights to take appropriate measures on corporate governance and stock market development in order to ensure their efficiency.

Originality/value

The approach of this study is different from the other available literature as it captures all types of shareholdings together in addition to other corporate governance and firm‐specific predictable variables.

Details

Studies in Economics and Finance, vol. 29 no. 4
Type: Research Article
ISSN: 1086-7376

Keywords

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Article
Publication date: 13 July 2012

Leopold Bayerlein and Omar Al Farooque

The purpose of this paper is to evaluate the changes of accounting policy choices and the harmonisation of accounting practices for two important financial reporting items…

Abstract

Purpose

The purpose of this paper is to evaluate the changes of accounting policy choices and the harmonisation of accounting practices for two important financial reporting items within and between three IFRS adopting countries. Furthermore, it aims to address methodological shortcomings in the prior harmonisation literature through the introduction of two newly developed significance assessment methodologies.

Design/methodology/approach

The influence of the mandatory IFRS adoption in Australia (AUS), Hong Kong (HK) and the UK on deferred taxation (DT) and goodwill (GW) accounting practices as well as the within and between country harmonisation of accounting practices is investigated through an event type study. These investigations are conducted using a McNemar test with Bowker extension as well as the Split C‐Index with a newly developed bootstrapping significance testing methodology.

Findings

This study demonstrates that the mandatory IFRS adoption in the analysed countries is linked to a significant harmonisation of DT and GW accounting practices between AUS, HK and the UK. Furthermore, the increase of adequate accounting policy information in the financial reporting documents of UK firms over the period of this study is identified as an important harmonisation accelerator.

Originality/value

This study adds to the prior literature due to its focus on the mandatory IFRS adoption within the analysed countries. Furthermore, the introduction of two newly developed methodologies to evaluate the significance of accounting policy choice changes and harmonisation over time addresses an important methodological shortcoming in the prior literature.

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