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1 – 10 of over 55000Mark 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.
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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…
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.
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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.
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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…
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.
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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…
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.
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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…
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.
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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.
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Reviews key elements of the Joint Planning Group’s proposals for new quality assurance arrangements. Identifies some challenges, prospects and opportunities for institutions…
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.
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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…
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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