Guest editorial

[No abstract available

Audit committee and factors that affect its characteristics: the case of Greece

Policy-makers currently place great emphasis on strengthening the audit committees’ structure. Underlying this is a belief that strengthening the audit committees’ structure may enhance the effectiveness as well as the quality of financial information. In this research, we examine the relationship between audit committee characteristics (number of AC members, percentage of independent audit committee members and percentage of board directors) and structure, accounting and corporate governance-related measures. Using a sample of 126 listed companies on the Athens Stock Exchange, we show that audit committee size has a positive relationship with the number of the firm’s employees and negative relationship with operating cash flows and the presence of an executive chairman. Moreover, we find that audit committee effectiveness has a positive relationship with the percentage of independent directors. On that basis, our findings are important since they highlight the usefulness of audit committees and offers insights to academics, practitioners and policy-makers. © 2020, Springer Nature Limited

The relationship between audit fees and audit committee characteristics: evidence from the Athens Stock Exchange

Strengthening the audit committee is an increasingly important element in the agenda of academics, practitioners and policy-makers in their effort to improve the quality of financial information and to promote audit quality. In this research, we examine the relationship between audit committee characteristics and audit and non-audit fees paid to auditors throughout the first year of the implementation of Law 4449/2017 in Greece. Using a sample of 126 listed companies on the Athens Stock Exchange, we show that audit committee characteristics (i.e. AC size, frequency of meetings and the presence of at least one member with previous experience in a similar position) have a positive relationship with audit fees. Moreover, we find that board size is positively associated with audit fees, which means that the assignment of new roles to audit committees has not been realized to its full potential as recent Law 4449/2017 highlights. Finally, we present evidence that audit committees with a high percentage of members with previous experience in audit committees may be less willing to allow a disproportionate provision of non-audit services in relation to total fees. On that basis, our study offers insights to Greek legislators, auditors, boards and corporate governance scholars. © 2020, Springer Nature Limited

Internal auditing in the public sector: a systematic literature review and future research agenda

Purpose: This study reviews post-2009 literature on public sector internal auditing (IA) and addresses three interrelated research questions (RQ): How is research on the public sector IA being developed? What are the focus and criticisms of the literature on public sector IA? What is the future of public sector IA research? Design/methodology/approach: We adopt a systematic literature review approach and analyze 78 peer-reviewed journal articles published between 2010 and 2019. We evaluate five criteria to identify the development of public sector IA research (RQ1), namely level of government, academic discipline, number of countries, geographic areas and MSCI country classification. Similarly, we use four criteria to present the focus and criticisms of the literature (RQ2), namely, type of organizational respondent, research instrument, theories and research theme examined. Finally, we use two criteria to propose new directions for future research (RQ3), namely, the directions resulted from RQ1 and RQ2 and the directions highlighted by the 10 most cited studies in the IA literature (i.e. out of the 78 papers identified). Findings: We find an increase of publications up to 2017, most of which are single country–focused, particularly on emerging markets. Moreover, we note that IA has been studied at all government levels, most often at the local government level. Although we identify multiple research themes examined in the literature, most studies emphasize “governance” and “operational effectiveness” using quantitative analysis, without reference to any theory. By analyzing these key features, we critically interpret the challenges as well as the skepticism that may surface by researchers. Finally, considering implications from this stream of research and analyzing the most influential studies, we recommend new avenues for investigation such as comparative studies among countries and different markets that provide further evidence on the international and regional levels and studies on the effect of cultural, institutional and demographical characteristics in IA. Practical implications: Our results will help researchers, practitioners and consultants to identify the key issues related with IA. Originality/value: This study is the first to provide a systematic literature review on public sector IA. Furthermore, it develops insights, critical reflections and avenues for future research in this field. © 2020, Emerald Publishing Limited

Exploring the black box: Board gender diversity and corporate social performance

This study explores the association between board gender diversity (BGD) and Corporate Social Performance (CSP). Using a unique sample of the top 81 non-financial European companies, we applied generalized method of moments (GMM) estimators for panel vector autoregressive regression (PVAR) models, to analyze the dynamic causal relationships between the BGD–CSP debate and eliminate potential bias and heterogeneity. Our results illustrate that BGD has a positive effect on the overall CSP and its four dimensions. Moreover, firms with a critical mass of female directors have a positive effect on overall CSP, especially on the dimensions of the community and employees. © 2022 Elsevier Inc

The impact of gender diversity on shareholder wealth: Evidence from European bank M&A

We explore the association between board gender diversity and shareholder value creation. Specifically, we investigate the impact of gender diversity on the economic impact of bank mergers and acquisitions (M&A). We employ a multi-year sample of M&A announced by European listed banks and find that: (i) the presence of women on the board of directors has a positive and statistically significant effect on acquirer gains; and (ii) boards with three or more women, or where women represent more than 25% of the board, have a stronger impact on acquirer gains than in the opposite case, consistent with critical mass theory. Moreover, banks with a critical mass of female directors perform better in undertaking value-enhancing M&A after the global financial crisis. Policy makers and practitioners could benefit from the findings by exploiting the advantages of board heterogeneity in terms of gender. © 2022 Elsevier B.V

Does boardroom gender diversity affect shareholder wealth? Evidence from bank mergers and acquisitions

We explore the effect of the presence of female directors in boards of directors on the economic impact of bank mergers and acquisitions (M&As). Using a unique, hand-collected dataset on 1,130 M&As announced by U.S. banks between 2003 and 2018, we find a significant negative relationship between female board membership and shareholder wealth after the banking crisis. Our results are robust to alternative model specifications that control for different proxies for gender diversity, heteroskedasticity, endogeneity and firm-specific variables. Our findings suggest that board gender diversity should be promoted with caution, and policy makers should acknowledge its limitations as a corporate governance mechanism. © 2020 John Wiley & Sons Ltd

Revisiting the linkage between internal audit function characteristics and internal control quality

This paper revisits the linkage between internal audit function (IAF) characteristics and internal control quality (ICQ). Using the responses of 48 chief auditing executives from Greek listed companies, we consider a random polynomial-kernel metabolized regression model, which implements in MATLAB, an extended version of the approach presented in a 2018 study by Oussii and Taktak. Our results demonstrate that the proposed random polynomial model is valid, reliable and appropriate for assessing ICQ, presenting estimation performance over three times better than that of the linear regression case. Our findings suggest that the proposed model can serve as a starting point for companies and practitioners to improve ICQ levels through the assessment of certain independent variables. On that basis, our study offers insights to regulatory bodies, auditors and scholars in perceiving the contribution of the IAF’s constituents to ICQ. Finally, our approach is expected to inspire conclusive follow-on research on the assessment of ICQ in other countries with similar settings. © 2022 Infopro Digital Risk (IP) Limited

The effect of board size on shareholder value: Evidence from bank mergers and acquisitions

This study examines the effect of board size on the economic impact of bank mergers and acquisitions (M&A) in the US. Using a hand-collected dataset of 508 M&A between 2012 and 2018, we find that board size is negatively related to acquirer excess returns. In an additional analysis, we show that large boards have positive value implications for banks that combine the CEO and chairman roles as well as for large banks. Our findings indicate that a “one-size-fits-all” approach to board size is not necessarily in the interests of shareholders; instead, a more flexible and proactive formulation is needed. © 2022 Elsevier Lt