Relationship between corporate governance and audit quality in the industry sector: Moderating role of firm performance
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Received August 6, 2024;Accepted September 17, 2024;Published September 30, 2024
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Author(s)Link to ORCID Index: https://orcid.org/0000-0001-7389-2108Link to ORCID Index: https://orcid.org/0000-0001-8810-3706Link to ORCID Index: https://orcid.org/0000-0003-0103-9719
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DOIhttp://dx.doi.org/10.21511/ppm.22(3).2024.49
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Article InfoVolume 22 2024, Issue #3, pp. 643-652
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This study explores the relevance of corporate governance mechanisms in determining audit quality, with a specific focus on the moderating role of firm performance in the Jordanian industrial sector. Audit quality is essential for ensuring transparency and accountability in financial reporting, making this analysis highly relevant for stakeholders aiming to strengthen corporate governance. The study sample included 64 manufacturing companies listed on the Amman Stock Exchange for the study period (2014–2022), with a total of 474 firm-year observations. The regression analysis is used to investigate the study hypotheses, including the key variables related to corporate governance, board performance, and audit quality. The findings show that company size has a significant positive effect on audit quality. There is no significant impact of CEO duality, independent directors, and ownership concentration on audit quality within the Jordanian industrial sector. The R² value of 0.067 indicates that approximately 6.7% of the variance in audit quality is explained by the study variables, while the F-value of 6.633, with a significance level of 0.00, suggests that the overall model is statistically significant, even though the explanatory power is relatively low. The study shows that company size is important to improve audit quality; other governance mechanisms may not have the same impact in the Jordanian industrial sector.
- Keywords
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JEL Classification (Paper profile tab)G34, M42, L25, G32
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References30
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Tables4
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Figures0
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- Table 1. Descriptive statistics
- Table 2. Pearson results
- Table 3. Results for the first model
- Table 4. Results for the second model
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Conceptualization
Mohammad Fawzi Shubita
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Data curation
Mohammad Fawzi Shubita
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Formal Analysis
Mohammad Fawzi Shubita
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Funding acquisition
Mohammad Fawzi Shubita, Nahed Habis Alrawashedh, Mohammad Ahmad Alqam
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Investigation
Mohammad Fawzi Shubita, Nahed Habis Alrawashedh
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Methodology
Mohammad Fawzi Shubita
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Resources
Mohammad Fawzi Shubita, Mohammad Ahmad Alqam
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Writing – original draft
Mohammad Fawzi Shubita
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Writing – review & editing
Mohammad Fawzi Shubita, Nahed Habis Alrawashedh, Mohammad Ahmad Alqam
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Supervision
Nahed Habis Alrawashedh, Mohammad Ahmad Alqam
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Conceptualization
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Does board composition have an impact on CSR reporting?
Problems and Perspectives in Management Volume 15, 2017 Issue #2 pp. 19-35 Views: 4456 Downloads: 1718 TO CITE АНОТАЦІЯCorporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.
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The impact of key audit matter (KAM) disclosure in audit reports on stakeholders’ reactions: a literature review
Problems and Perspectives in Management Volume 17, 2019 Issue #3 pp. 323-341 Views: 4455 Downloads: 1852 TO CITE АНОТАЦІЯThis article presents a literature review of 49 empirical studies on key audit matter (KAM) disclosure in audit reports. The study involves a structured literature review on KAM disclosure based on the reactions of stakeholders. The limitations of former studies and useful recommendations for research are stressed. Five major streams of empirical research that analyze the impact of KAM disclosure on stakeholders’ reactions are focused: (1) shareholders (e.g. investors’ perceptions of auditors’ responsibility and litigation, value relevance and investors’ decisions); (2) debtholders (e.g. loan contracting terms); (3) external auditors (e.g. audit processes and audit fees); (4) boards of directors (e.g. earnings management); and (5) other stakeholders (e.g. informational value for suppliers and customers). The authors stress that most of the included studies use experimental or archival data and analyze the impact of KAM disclosure on investor reactions in a US-American setting. As the international standard setters assume a positive impact of KAM on stakeholder reactions, mixed empirical results are found. Although there are some indications of decreased earnings management behavior, most studies find no significant changes in auditor behavior. Furthermore, there are many insignificant results with regard to shareholders’ reaction in line with our stakeholder and behavioral agency framework. The literature review is especially useful for management decisions, because firm reputation may be positively or negatively influenced by KAM regulations.
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Corporate governance and financial performance: an empirical analysis of selected multinational firms in Nigeria
Gideon Tayo Akinleye , Odunayo Olarewaju , Bamikole Samson Fajuyagbe doi: http://dx.doi.org/10.21511/ppm.17(1).2019.02Problems and Perspectives in Management Volume 17, 2019 Issue #1 pp. 11-18 Views: 3386 Downloads: 568 TO CITE АНОТАЦІЯThis study focused on corporate governance and performance of selected Nigerian multinational firms from 2012 to 2016. Specifically, the study focused on the effect of board size, activism and committee activism on return on asset and firm growth rate. Secondary data collected from four multinational firms were analyzed via static panel estimation techniques. While board size and board activism exerted significant negative impact on return on asset, committee activism exerted insignificant impact. The results of the study further showed that board size and board activism exert insignificant negative impact on firm’s growth rate, while committee activism insignificantly spurs firm’s growth rate. Decisively, discoveries from this study reflect that corporate governance has significant negative impact on return on asset, but has insignificant influence on the growth rate of Nigerian multinational firms. Based on these findings, the authors recommended that corporate governance dynamics in firms world over should be reconsidered, such that it gives credence to more than just numbers of persons or meetings held, but the main reasons and deliberations in such meetings. It was also recommended that excessive increase in magnitude or frequency of meetings held by board of directors cum committee should be avoided.