Impact of audit committee and audit quality on preventing earnings management in the pre- and post- Nigerian corporate governance code 2011

Earnings management have been considered as one of the methods used by the business leaders to mislead their stakeholders to report unrealistic numbers, despite the various check and balances (e.g. corporate governance code) on the process.Nigeria experienced two corporate governance codes issued by SEC, code 2003 and code 2011.This study tends to measure the effectiveness of these two codes and make comparisons using audit committee and audit quality against earnings management in the pre- and post-code 2011

Internal corporate governance and board performance in monitoring roles: Evidence from Malaysia

Purpose – This paper aims to examine the relationship between internal corporate governance mechanisms and board performance in monitoring roles.Design/methodology/approach – A survey questionnaire was used to gather data on board performance, while annual reports were employed to gather data on internal corporate governance mechanisms. Data for board performance were based on 112 directors who represent the companies. Findings – Factor analysis extracted two dimensions of monitoring roles: management oversight roles and performance evaluation roles. Non-independent non-executive directors and managerial ownership were found to be positively related to both dimensions of monitoring roles, while the multiple directorships of non-executive directors were negatively related to management oversight roles.Practical implications – The paper establishes the need for regulators to pay particular attention to multiple directorships, which are commonly practiced in public listed companies. The contribution of non-independent non-executive directors rather than independent directors in monitoring roles calls for further research. Regulators need to emphasize the performance evaluation roles of the board of directors (BOD), as much emphasis has been given to management oversight roles.Originality/value – The study contributes to the literature concerning monitoring roles as it shows that management oversight roles and performance evaluation roles are differentiated. The findings provide an avenue for the contribution of non-independent non-executive directors and multiple directorships in monitoring roles

Directors’ remuneration disclosure transparency in Nigeria and the influence of block share ownership

This paper examines directors’ remuneration disclosure transparency in an emerging economy (Nigeria).We specifically examine how the block share ownership influences the level of transparency in the disclosure of directors’ remuneration in a sample of companies listed on the Nigerian Stock Exchange in 2012. Using ordinary least squares and binary logistic regressions to examine the relationship, we find that block share ownership is associated with lower transparent disclosure of directors’ remuneration.The result shows a positive relationship between audit quality and transparent disclosure of directors’ remuneration. The study finds that the transparency score is less than 40%.On the whole, we provide evidence that managers in Nigerian Listed Companies are inclined not to make voluntary disclosure of their remuneration to the public.This paper has implication for policy makers and regulatory authorities in Nigeria on the need to embark on remuneration disclosures reforms so as to make directors’ remuneration disclosure mandatory for Nigerian Listed Companies to make it comparable with accepted global good practice.This study contributes to the remuneration disclosure transparency literature by providing support for the expropriation hypothesis in the behaviour of block shareholders from an emerging economy whose market is very much different from those of developed economies

Directors’ independence, internal audit function, ownership concentration and earnings quality in Malaysia

Concentration of ownership in Malaysian public listed companies contributes to agency conflict between majority and minority shareholders. An effective monitoring mechanism is critical to mitigate this conflict.The study aims to examine the influence of board and audit committee independence, internal audit function and ownership concentration on earnings quality proxied by discretionary accruals.The sample of the study 508 companies listed on the Bursa Malaysia Main Market from 2009 to 2012.Two measures of discretionary accruals are used: Modified Jones model (Dechow et al., 1995); and extended Modified Jones Model (Yoon et al., 2006). Using OLS regression, results of the study suggest that audit committee independence and more investment in internal audit function are related to higher earnings quality. However, board of directors’ independence and ownership concentration are associated with lower earnings quality. The finding indicates the importance of audit committee independence in producing quality financial reporting. Consistent findings are found for most variables in both models.The findings of the study have implication on the use of measurement of discretionary accruals in earnings quality studies and corporate governance practices in Malaysia

Company performance in Nigerian listed companies: Do large shareholders expropriate minority shareholders?

It is argued that large shareholders have enormous influence over their companies as their ability to monitor the executives can mitigate the agency problems.This paper examines how large shareholders are related to company performance after distinguishing domestic large shareholders from the foreign large shareholders Using a panel of 58 companies listed on the Nigerian Stock Exchange with 222 company-year observations from 2009 to 2012, firm-level fixed effects regression was used for analysis.We find evidence that domestic large shareholders are associated with better company performance while foreign large shareholders show a concave relationship with company performance with inflection point at 31.88%.The empirical result also shows that the joint presence of the both domestic large shareholders and foreign large shareholders in companies seems to make them pursue overall wealth maximization objective of the company.The result is consistent with the contention that concentrated ownership remains an effective corporate governance mechanism in an environment with weak investor protection rights.The study contributes to the corporate governance literature of the substitution effect of large shareholders for effective corporate governance practice

Corporate voluntary disclosure practices of banks in Bangladesh

This study aims to explore the corporate voluntary disclosure practices of the listed banks in an emerging economy namely Bangladesh.Results show that the extent of voluntary disclosure significantly improves from 2005 to 2008.However, the level of disclosure items related to corporate governance and risk management are lower than other disclosure categories.Overall findings of this study contribute in the accounting and economic literature by adding an empirical results of voluntary disclosure of a highly regulated industry from an emerging economy. Nevertheless, the results have the limitation to generalize for other industries as well as for banks from countries

Internal and external audit attributes, audit committee characteristics, ownership concentration and earnings quality: Evidence from Malaysia

The objective of the study is to examine the association between internal and external audit attributes, audit committee characteristics, ownership concentration and discretionary accruals (as a proxy of earnings quality) based on the agency and resource dependence theories.The final sample of the study is 508 firms listed on the Malaysia Main Market from 2009 to 2012.Two measures of discretionary accruals are used, Modified Jones model by Dechow et al. (1995); and extended Modified Jones Model by Yoon et al. (2006).Results of the study suggest that outsourcing internal audit function, investment in internal audit function and external audit fees are related to higher earnings quality. However, large audit committee size, more frequent audit committee meetings, having a senior or former audit partner as audit committee chairman and ownership concentration are associated with lower earnings quality.This study extends the prior related literature by apply extended modified Jones model by Yoon, et al.’s (2006) of discretionary accruals to measure earnings quality in Malaysia Main Market listed companies and introduce new variables, namely audit committee chairman who is a senior or former audit partner in the audit firm

Practitioners' perception toward AIS course content offered by Malaysian universities

The purpose this study is to determine the degree of importance of each topic included in the Accounting Information System (AIS) course from the practitioners' point of views. This study was motivated by the increasing progress in information technology which proposed to re-examine the AIS course in order to meet the expectations and requirements of the profession. Three hundred and forty (340) questionnaires were sent to there different groups of companies namely public accounting firms, industry and commerce, and banking and finance. The response rate received is 22.35%. Respondents' opionions on the importance od AIS topics were measured using of five-point Likert Scale

Corporate governance and IFRS 7 disclosure in Nigerian banks: A triple model assessment

This study employs three models, pooled OLS, fix effect with white cross-section standard error covariance and panel EGLS data with cross-section random effects to assess the impact of corporate governance and IFRS 7 financial instruments disclosure in the balance sheet of 14 listed banks on the Nigerian Stock Exchange during the period 2008-2012. The empirical evidence illustrates that the chi-square and F-statistics in both pooled OLS and fixed effect are significant hence, not appropriate for estimating the model.We employ the Hausman test and applied the redundant effect equation model to further test for the effect.It is found that the null hypothesis in the correlated random effect has an insignificant probability value of 1.0000 supporting the conclusion that IFRS 7 disclosure is related to board committee, board accounting and board financial expertise and the type of gender in boards of the investigated banks.Based on this analysis, the random effect model which report significant values on three of the independent variables (BC, 0.0014 and BE, 0.0000) at 1% and (GEN, 0.0056) at 10% level of significance is the preferred model. These findings are apropos to managers, accountants and regulatory authorities especially in banks of developing countries which have just embrace or are in the process of embracing IFRS7 in their financial instruments disclosure.We further recommend that existing regulations in Nigeria mandatorily compel listed banks in Nigeria to have at least 15% women as board members because of their positive contribution towards compliance with disclosure requirements