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Article
Publication date: 12 February 2018

Mark Kohlbeck, Jomo Sankara and Errol G. Stewart

This paper aims to examine whether external monitors (auditors and analysts) constrain earnings strings, an indicator of earnings management, and whether this monitoring is more…

Abstract

Purpose

This paper aims to examine whether external monitors (auditors and analysts) constrain earnings strings, an indicator of earnings management, and whether this monitoring is more effective after the implementation of the Sarbanes-Oxley Act of 2002 (SOX), given the emphasis of SOX on improving auditing, financial reporting and the information environment.

Design/methodology/approach

Agency theory establishes the premise between external monitoring and earnings strings. Auditor tenure and number of analysts following provide measures for external monitoring quality. Using prior research, empirical models explaining the presence of an earnings strings and earnings strings trend are developed to test the hypotheses.

Findings

Pre-SOX, extreme auditor tenure, indicating lower quality external monitoring, is associated with greater earnings strings trend, and analyst coverage is associated with increased likelihood of earnings strings and greater earnings strings trend consistent with analyst pressure on management. More effective auditor and analyst monitoring occurs post-SOX in terms of reduced likelihood of earnings strings and earnings strings trend.

Originality/value

The authors provide evidence on how elements of external monitoring are associated with increased earnings strings pre-SOX. Further, they contribute to the debate on the impact of SOX on external firm monitoring and the overall financial information environment. By focusing on earnings strings, the outcome of earnings management, the authors provide a unique understanding of external monitoring that also provides insight on the overvaluation of equity and ultimate destruction of firm value. The evidence demonstrates how regulation has contributed to an improved financial reporting environment and external monitoring.

Details

Review of Accounting and Finance, vol. 17 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 1 December 2005

Lee Harvey

To provide a history of the emergence of quality systems from the mid‐1980s. To show how quality became a primary policy concern in higher education policy. To map the development…

6311

Abstract

Purpose

To provide a history of the emergence of quality systems from the mid‐1980s. To show how quality became a primary policy concern in higher education policy. To map the development of quality processes and raise questions about dominant approaches and express concerns for the future.

Design/methodology/approach

Historical document analysis.

Findings

The problems in institutionalising quality are analysed and it is concluded that the British system of quality monitoring failed to engage with transformative learning and teaching.

Practical implications

As the UK developments guided many other countries into developing a system of quality, the UK history of the emergence and development of quality processes 1985‐2005 is of interest to international readers. It identifies both good practice and what to avoid.

Originality/value

The historical analysis reveals how quality evaluations were guided as much by political pragmatism as rational evaluation.

Details

Quality Assurance in Education, vol. 13 no. 4
Type: Research Article
ISSN: 0968-4883

Keywords

Article
Publication date: 13 May 2019

David Eddy-Spicer, Melanie Ehren and Mukdarut Bangpan

The collection and dissemination of standardized performance information about students, teachers, schools and school systems offer potentially important tools for school…

Abstract

Purpose

The collection and dissemination of standardized performance information about students, teachers, schools and school systems offer potentially important tools for school accountability and resource allocation as well as school improvement in developing countries. However, performance monitoring systems in developing countries are in many cases copied from those in high-income countries without a clear understanding of their functioning in contexts of limited resources and capacity for change. The purpose of this paper is to examine the conditions under which and the mechanisms through which system-wide performance monitoring affects school-level organization and processes in low- and middle-income countries (LMICs).

Design/methodology/approach

The review employs realist synthesis because of the complexity and dynamism of conditions in LMICs, the wide variability in available literature and the aim of explaining how particular organizational outcomes arise, given particular conditions. The authors draw on findings from a systematic review of 22 studies and reports, published since 2001, related to the implementation of performance monitoring.

Findings

The findings highlight key barriers to the use of data to inform school accountability and improvement. Capacity to collect, interpret and use data is an important condition to both effective external accountability as well as improvement of schools.

Originality/value

The review uses realist approaches to building middle-level theories to help scholars, educational advisers, policy makers and educational leaders understand the causal processes that result in certain outcomes from monitoring activities and to identify the conditions that are necessary for those processes to have the desired outcomes.

Details

Journal of Professional Capital and Community, vol. 4 no. 3
Type: Research Article
ISSN: 2056-9548

Keywords

Open Access
Article
Publication date: 29 March 2022

Yuanhui Li, Yezen Kannan, Stephen Rau and Shuning Yang

The aim of this paper is to provide additional insights on the association between real earnings management (REM) and crash risk, particularly from the perspective of an emerging…

2842

Abstract

Purpose

The aim of this paper is to provide additional insights on the association between real earnings management (REM) and crash risk, particularly from the perspective of an emerging market economy. It also examines the moderation role that internal and external corporate governance may play in this area.

Design/methodology/approach

Relying on archival data from the RESSET and CSMAR databases over a timeframe from 2010 to 2018 of China listed company, the authors test the hypotheses by regressing common measures of crash risk on the treatment variable (REM) and crash risk control variables identified in the prior crash risk literature. The authors also introduce monitoring proxies (internal controls as an internal governance and institutional ownership as an external governance) and assess how effective internal and external governance moderate the relation between REM and stock price crash risk.

Findings

The results suggest firms with higher REM have a significantly greater stock price crash risk, and that this association is mitigated by external monitoring. That is, greater institutional ownership, particularly pressure insensitive owners, mitigates the impact of REM on stock price crash risk. However, internal control does not mitigate the association between REM and stock price crash risk.

Originality/value

Following the passage of the Sarbanes–Oxley (SOX) Act, prior research has documented an increase in the use of REM and a positive association between REM and cash risk. The authors demonstrate that they persist in one of the largest emerging markets where institutional regulations, market conditions and corporate behaviors are different from those in developed markets. Also, the assessment of the moderation effect of internal and external governance mechanisms could have meaningful implications for investors and regulators in Chinese and other emerging markets.

Details

China Accounting and Finance Review, vol. 24 no. 2
Type: Research Article
ISSN: 1029-807X

Keywords

Article
Publication date: 24 August 2017

Hamdan Amer Al-Jaifi, Ahmed Hussein Al-rassas and Adel Ali AL-Qadasi

The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate…

2574

Abstract

Purpose

The purpose of this paper is to examine the impact of corporate governance strength on stock market liquidity in an emerging country, namely, Malaysia, by constructing a corporate governance score that captures both internal monitoring mechanisms (board of directors’ characteristics, audit committee’s characteristics and internal audit function) and external monitoring mechanism (audit quality).

Design/methodology/approach

The study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression and several estimation methods such as two-stage least squares using instrumental variables (IV-2SLS) and dynamic GMM are employed.

Findings

This study finds a significant positive association between corporate governance effectiveness and stock market liquidity. The finding is robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias.

Research limitations/implications

This result implies that the firms with effective monitoring mechanisms mitigate information asymmetry which leads to less adverse selection problems among traders.

Practical implications

This study provides implications for regulators to help design regulations that enhance stock market liquidity. This study could also help investors and traders to formulate their trading decisions, and enables firms to know the importance of strengthening the corporate governance monitoring mechanisms.

Originality/value

This study constructs a corporate governance effectiveness measure by combining both internal and external monitoring mechanisms. These mechanisms have not been constructed together in one score in the corporate governance literature and the impact of internal audit function, as an internal monitoring mechanism on liquidity, has yet to be examined.

Details

International Journal of Managerial Finance, vol. 13 no. 5
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 2 February 2010

Dennis Chung Sea Law

The common approaches to quality assurance (QA), as practiced by most post‐secondary education institutions for internal quality monitoring and most QA authorities for external

4443

Abstract

Purpose

The common approaches to quality assurance (QA), as practiced by most post‐secondary education institutions for internal quality monitoring and most QA authorities for external quality monitoring (EQM), have been considered by many researchers as having largely failed to address the essence of educational quality. The purpose of this paper, although not meant to be exhaustive, is to review some of these approaches.

Design/methodology/approach

The paper reviews the relevant issues concerning total quality management, performance indicators and EQM, the three common approaches to the QA of post‐secondary education have been reviewed.

Findings

While from a pragmatic perspective these approaches have their respective reasons for existence, they can all be criticized as lacking rigorous theoretical foundations and being mainly driven by demands of satisfying external agendas (e.g. to enforce institutional accountability or compliance) instead of academic considerations (e.g. to facilitate student learning). As a result, a mismatch between the rhetoric and reality of educational quality has become a common experience of most practitioners, not only in western contexts from which these approaches were originated, but also in other cultural contexts that have adopted them uncritically. It is undeniable that the overall quality culture within most post‐secondary education systems worldwide, as currently manifested, tends to favor the institutional aspects rather than the student aspects of the quality issues, and tends to lean more on the accountability‐led view rather than the improvement‐led view of quality assurance.

Originality/value

The paper sheds some light on the quality debate in post‐secondary education.

Details

Quality Assurance in Education, vol. 18 no. 1
Type: Research Article
ISSN: 0968-4883

Keywords

Book part
Publication date: 16 July 2018

Abstract

Details

Organisational Roadmap Towards Teal Organisations
Type: Book
ISBN: 978-1-78756-311-7

Book part
Publication date: 6 September 2018

Debarati Bhattacharya, Tai-Yu Chen and Wei-Hsien Li

This paper studies how a firm reacts to the threat from product market competition. Consistent with the strategic equilibrium model, we find that a firm increases investment in…

Abstract

This paper studies how a firm reacts to the threat from product market competition. Consistent with the strategic equilibrium model, we find that a firm increases investment in response to external product market threats. Further, the paper analyzes whether product market threats lead to an improvement in investment efficiency. When faced with product market competition, we find that firms that are otherwise likely to underinvest (overinvest) increase (increase) their investment significantly (less than the firms that are likely to underinvest) in the next period. However, firms that are predisposed to overinvest do not make cuts in capital expenditure, which indicates that strategic investment is a critical countermeasure for addressing competitive threats for all firms, their inclination to make suboptimal investment decisions notwithstanding. Overall, the evidence supports the predatory risk of waiting as well as competition and investment efficiency hypotheses. Additional tests suggest that product market threat partially substitutes for other external monitoring mechanisms designed to manage agency problems.

Article
Publication date: 1 September 1997

Jethro Newton

Reviews key elements of the Joint Planning Group’s proposals for new quality assurance arrangements. Identifies some challenges, prospects and opportunities for institutions…

291

Abstract

Reviews key elements of the Joint Planning Group’s proposals for new quality assurance arrangements. Identifies some challenges, prospects and opportunities for institutions arising in the context of the proposed arrangements. Notes the Joint Planning Group’s emphasis on partnership and argues that a focus on self‐regulation may provide the basis of a way forward for future development for the sector, the new quality agency and those who contract with it.

Details

Quality Assurance in Education, vol. 5 no. 3
Type: Research Article
ISSN: 0968-4883

Keywords

Article
Publication date: 1 October 2004

M. Marais

Via the Institute of Internal Auditors, founded in 1941, the internal auditing profession actively promote the quality of internal auditors and internal audit activities. Since…

1019

Abstract

Via the Institute of Internal Auditors, founded in 1941, the internal auditing profession actively promote the quality of internal auditors and internal audit activities. Since 1999, internal auditing standards have been revised. From 1 January 2002, all internal audit activities/any consultant rendering internal auditing services must undergo quality control, according to the provisions of Attribute Standard 1300. The revised internal auditing standards on quality control in internal audit activities reflect fundamental changes for the internal auditing profession. This article analyses the formal prescriptions and guidelines on quality in internal audit activities contained in the internal auditing standards and related practice advisories.

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