Audit firm attributes and financial performance: Traditional vs market-based measures in listed Nigerian manufacturing firms

The recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.

Value creation has become a very important concept in finance. To this end, value creation metrics, like market value added and economic value added have raised the question of their superiority and ability to reflect the true value of organizations, as opposed to the classic accounting indicators like ROE, ROA and EPS. Nevertheless, EVA can only be calculated for listed companies, which makes it difficult to use this indicator to measure value creation for non-listed companies. In this way, some alternatives have been used such as the accounting beta to calculate the return on equity and subsequently the determination of the EVA. Within this framework, the central point of this research is to empirically verify the idea that the normal EVA and EVA calculated using accounting beta are the better measure than traditional indicators to explain MVA. A panel of 32 companies traded on the Casablanca Stock Exchange over the period 2015–2019 was selected for this study. The regression method on panel data was used. The results show that normal EVA is a superior metric than the classical indicators to explain MVA. In addition, the EVA calculated from the accounting beta could be used as a measure adapted to the case of unlisted companies to measure value creation.

This study aims to investigate the impact of the share buyback process and its motives on financial performance from an accounting and economic perspective. The study sample consisted of 66 firms listed on the Egyptian Stock Exchange from 2009 to 2020 and employed the OLS regression analysis. The results show a positive effect of share buybacks on financial performance, measured by the added economic value (EVA) and the return on equity (ROE). In contrast, the results show an insignificant effect of share buybacks on the return on assets (ROA). The study found that management’s motives to buy back shares affect a company’s financial performance. The study also found that management’s motive to achieve a cash surplus improves the company’s financial performance. The study also found that the company’s management motive to increase earnings per share is one of the most important motives for the company to buy back shares, which also improves the company’s financial performance. The study also showed that the economic value added (EVA) is one of the most important measures of financial performance, in which the repurchase of shares had the most significant impact in improving it over the return on assets or the return on equity. However, the study did not find evidence that the firms repurchase of shares out of increased financial leverage affects the financial performance. Moreover, the study found that increasing earnings per share is the most crucial motive for sharing buybacks in the Egyptian market.

Acknowledgments
I thank Jeddah International College for funding this research and continuous support from the Dean, Dr. Tariq Hamdi, and the general manager, Mr. Yazid Al Tunisi.
I thank Professor Dr. Mohamed Tahoun, Professor of Financial Accounting at Alexandria University, for reviewing this research before sending it to the journal.