The effect of internal control environment on the value relevance of earnings
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Author(s)Hyun-Ah LeeLink to ORCID Index: http://orcid.org/0000-0001-5435-3192
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DOIhttp://dx.doi.org/10.21511/imfi.16(2).2019.16
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Article InfoVolume 16 2019, Issue #2, pp. 182-194
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This study examines whether a suitable control environment increases the value relevance of earnings by providing greater assurance on the reliability of financial reporting. Specifically, the level of suitable control environment is assessed by considering the quantity and quality of IC personnel, which are closely related to the personnel integrity/ethical values, competence, and authority/responsibility. Using a sample of 1,834 firm-year observations of Korean listed companies covering 2005–2010, the author finds that earnings are more value relevant when the increase in the average work experience of IC personnel is greater. However, no evidence is found that the value relevance of earnings is positively associated with the increase in the proportion of IC personnel. The findings suggest that a suitable control environment, established by deployment of qualified IC personnel with more work experience, improves the IC effectiveness and, thus, provides greater assurance on the reliability of financial reporting to market investors.
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JEL Classification (Paper profile tab)M41, O15, G32
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References32
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Tables7
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Figures0
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- Table 1. Sample selection procedure
- Table 2. Descriptive statistics of variables
- Table 3. Correlations of variables
- Table 4. Analysis on the value relevance of earnings for subgroups
- Table 5. Analysis on the Effect of IC Environment on the Value Relevance of Earnings
- Table 6. Analysis on the effect of IC environment on the value relevance of earnings after controlling for the effect of the quantity and quality of IC personnel on each other
- Table 7. Additional Analysis on the Effect of IC Environment on the Value Relevance of Earnings using Modified Variables
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IFRS convergence: opportunities and challenges in India
Accounting and Financial Control Volume 1, 2017 Issue #2 pp. 13-18 Views: 3834 Downloads: 1738 TO CITEPast decade has witnessed several changes in the process of conduct of business activities across the world especially due to the wave of globalization. It has also made drastic changes in the process of financial reporting, in particular the continuing adoption of IFRS (International Financial Reporting Standards) worldwide. IFRS are high quality, understandable, enforceable and globally acceptable accounting standards issued by IASB (International Accounting Standard Board). Thus these are a set of international accounting standards stating how a particular type of transaction and other events should be reported in the financial statements. Thus IFRS are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. IFRS is becoming the global language of business with over 40% of the world adopting this as their standard for reporting. India also decided to converge to IFRS from 1st April 2016 in a phased manner, which in turn improves the financial statement comparability and transparency that helps to attract greater cross border investments. This paper focuses on the convergence of IFRS with Indian Accounting Standards, its utility, issues and challenges faced by the stakeholders. It also throws light to the ways through which problems can be addressed.
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Impact of corporate governance mechanisms on financial reporting quality: a study of Indian GAAP and Indian Accounting Standards
Faozi A. Almaqtari 
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Abdulwahid Abdullah Hashed ,
Mohd Shamim ,
Waleed M. Al-ahdal
doi: http://dx.doi.org/10.21511/ppm.18(4).2020.01
Problems and Perspectives in Management Volume 18, 2020 Issue #4 pp. 1-13 Views: 3043 Downloads: 623 TO CITE АНОТАЦІЯThe present study examines the impact of corporate governance mechanisms on financial reporting quality under Indian GAAP and Indian Accounting Standards (Ind. AS). A sample of 97 companies listed on the Bombay Stock Exchange is selected. Corporate governance mechanisms have been considered as independent variables, and financial reporting quality is the dependent variable. Corporate governance is measured by board effectiveness (board size, independence, diligence, and expertise), audit committee attributes (size, independence, diligence, and expertise), foreign ownership, and audit quality. Descriptive statistics, correlation, and OLS regression are conducted to estimate the results. The study results reveal that board characteristics and audit committee attributes, except for audit committee diligence, have a significant effect on financial reporting quality. However, the impact of board diligence and audit committee attributes is negative. Foreign ownership has no contribution to financial reporting quality, but audit quality has a significant effect. The findings of the study have considerable implications for regulators, policymakers, managers, investors, analysts, and academicians. More emphasis should be given to compliance with Ind. AS, and an oversight body for compliance with Ind. AS should be established.
Acknowledgment
This publication was supported by Deanship of Scientific Research, Prince Sattam Bin Abdulaziz University, Alkharj, Saudi Arabia. -
The effect of applying COSO-ERM model on reducing fraudulent financial reporting of commercial banks in Jordan
Banks and Bank Systems Volume 13, 2018 Issue #2 pp. 107-115 Views: 1813 Downloads: 425 TO CITE АНОТАЦІЯThis study aims to test the effect of applying the model of the Committee Sponsoring Organizations for enterprise risk management (COSO-ERM) on reducing fraudulent financial reporting in commercial banks operating in Jordan. Furthermore, the study identifies the role of each board of directors, audit committee, executive management, human resource management, and internal audit as one of the corporate governance mechanisms in enhancing the effectiveness of internal control systems. The study revealed an impact of applying the Committee of Sponsoring Organizations model for enterprise risk management (COSO-ERM) on preventing fraudulent financial reporting, where it reached influence around 77.8% on the dependent variable (fraudulent financial reporting). The study also found that each of internal control, event identification, risk assessment and response, and control activities variables affects dependent variable (fraudulent financial reporting) in commercial banks operating in Jordan.
