1,720,995 research outputs found
Corporate governance in 2010 : what will change?
No full text2010 is expected to see the publication of a new UK Code on Corporate Governance, replacing the Combined Code. Why is a new code being issued? What significant changes are proposed? WIll it change the corporate governance world
Lobbying the auditing practices board : analysis of responses to the expanded audit report
No full textIn 1993 the Auditing Practice Board (APB) in the United Kingdom issued Statement of Auditing Standard 600, Auditors’ Reports on Financial Statements.\ud
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The new expanded audit report was issued in an attempt to reduce the audit expectations gap. Prior to the issuing of this standard the APB issued a Consultative Document in 1991 and an Exposure Draft in 1992. In this paper we investigate the comments made to the APB by respondents\ud
to these two documents. We found that a number of respondents doubted whether the new standard was of itself sufficient to reduce the expectations gap. In addition, we found that where respondents made substantive suggestions for changes to the proposed standard these generally were\ud
not implemented by the APB
Audit pricing and product differentiation in small private firms : evidence from Thailand
No full textPurpose – There is limited evidence on how differences in economic environments affect the demand for and supply of auditing. Research on audit pricing has mainly focused on large client markets in developed economies; in contrast, the purpose of this paper is to focus on the small client segment in the emerging economy of Thailand which offers a choice between auditors of two different qualities.\ud
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Design/methodology/approach – This paper is based on a random stratified sample of small clients in Thailand qualifying for audit exemption. The final sample consists of 1,950 firm-year observations for 2002-2006.\ud
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Findings – The authors find evidence of product differentiation in the small client market, suggesting that small firms view certified public accountants as superior and pay a premium for their services. The authors also find that audit fees have a positive significant association with leverage, metropolitan location and client size. Audit risk and audit opinion are not, however, significantly associated with audit fees. Furthermore, the authors find no evidence that clients whose financial year ends in the auditors’ busy period pay significantly higher audit fees, and auditors engage in low-balling on initial engagements to attract audit clients. \ud
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Research limitations/implications – The research shows the importance of exploring actual decisions regarding audit practice and audit pricing in different institutional and organizational settings.\ud
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Originality/value – The paper extends the literature from developed economies and large/listed market setting to the emerging economy and small client market setting. As far as the authors are aware, this is the first paper to examine audit pricing in the small client market in an emerging economy
Board gender diversity and sustainability reporting quality
No full textBased on the notion that a diverse board will take a more balanced view and pay greater attention to social responsibility and stakeholder concerns, this paper examines the effect of board gender diversity, measured using a range of proxies, on sustainability reporting\ud
quality. After controlling for corporate governance as well as firm reporting incentives, reporting behaviour and reporting environment, we find that gender diverse boards are associated with higher quality sustainability reports and independent female directors have greater effect on sustainability reporting quality than female directors. Our findings have implications for policy formulation and provide evidence for a softer ‘comply or explain’\ud
(as opposed to quota based) approach to encourage board gender diversity and its effects on sustainability reporting quality
Auditor communication in an evolving environment: Going beyond SAS 600 auditors' reports on financial statements
Full text linkIn 1993 the Auditing Practices Board issued an expanded audit report, SAS 600 Auditors' Reports on Financial Statements, in an attempt to educate users and to clarify certain matters pertaining to the audit function. This paper investigates the extent to which the new audit report, SAS 600, has been successful in aligning the views of auditors, preparers and users about issues dealt with in the expanded audit report, and the extent to which the three groups considered that it would be useful for additional matters, including corporate governance, to be reported upon by the auditor. Our findings suggest that SAS 600 has been successful in clarifying the purpose of the audit and the respective responsibilities of auditors and directors. However, to meet the expectations of users and to add more value, the audit report needs to provide more information about the findings of the audit. © 2001 Academic Press
Turnbull - Generating Undue Expectations of the Corporate Governance Role of Audit Committees
No full textFollowing an initial consultation draft (Turnbull 1999a), the Internal control Working Party of the Institute of Chartered Accountants in England and Wales, chaired by Nigel Turnbull, executive director of Rank Group plc. has published Internal Control: Guidance for Directors of Listed companies Incorporated in the UK (Turnbull, 1999b). The guidance is commonly referred to as the Turnbull Report. This paper outlines the key recommendations of the report and discusses some of its implications, particularly in the context of the increasing emphasis on a broader corporate governance role for audit committees. The paper suggests that the increasing role envisaged of audit committees for example lately in the UK by Turnbull, may generate undue expectations are premised on an unsubstantiated notion of the contribution of audit committees
Regulating audit quality: Restoring trust and legitimacy
No full textThe global financial crisis, corporate failures and scandals in many countries raise significant questions audit quality. In the UK, the FRC took the unprecedented step of codifying audit quality in its 'Audit Quality Framework'. We analyze the extent to which audit firms, professional bodies, and investors considered the FRC proposals sufficient for addressing concerns about audit quality. Using impression management and legitimacy as a framework to analyze stakeholder responses we go beyond audit quality drivers identified by the FRC. In contrast to the drivers identified by the FRC, our focus on transparency, expertise, professionalism and commercialization of the audit shows that FRC, audit firms and professional bodies have mainly focused on issues which possibly do not pose a threat to the commercial interest of audit firms. Overall, our analysis shows that regulatory and professional bodies engaged in image management and the promotion of audit quality in an attempt to remedy tarnished image and augment their legitimacy and standing. In attempting to restore trust and legitimacy regulatory bodies, such as the FRC, have to reconcile complex often contradictory stakeholder demands. © 2011 Elsevier Ltd
Shari’ah supervision, corporate governance and performance: Conventional vs. Islamic banks
Full text linkThe performance and accountability of boards of directors and effectiveness of governance mechanisms continue to be a matter of concern. Focusing on differences between conventional banks and Islamic banks, we examine the effect of (i) Shari-ah supervision boards, (ii) board structure and (iii) CEO-power on performance during the period 2005-2011. We find Shari'ah supervision boards positively impact on Islamic banks' performance when they perform a supervisory role, but the impact is negligible when they have only an advisory role. The effect of board structure (Board size and board independence) and CEO power (CEO-chair duality and internally recruited CEO) on the performance of Islamic banks is overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards overall negative. Our findings provide support for the positive contribution of Shari'ah supervision boards but also emphasize the need for enforcement and regulatory mechanism for them to be more effective
The corporate governance effects of audit committees
Full text linkArguments associated with the promotion of audit committees in many countries are premised on their potential for alleviating weaknesses in corporate governance. This paper provides a synthesis and evaluation of empirical research on the governance effects associated with audit committees. Given recent policy recommendations in several countries aimed at strengthening these committees, it is important to establish what research evidence demonstrates about their existing governance contribution. A framework for analyzing the impact of audit committees is described, identifying potential perceived effects which may have led to their adoption and documented effects on aspects of the audit function, on financial reporting quality and on corporate performance. It is argued that there is only limited and mixed evidence of effects to support claims and perceptions about the value of audit committees for these elements of governance. It is also shown that most of the existing research has focused on factors associated with audit committee existence, characteristics and measures of activity and there is very little evidence on the processes associated with the operation of audit committees and the manner in which they influence organizational behaviour. It is clear that there is no automatic relationship between the adoption of audit committee structures or characteristics and the achievement of particular governance effects, and caution may be needed over expectations that greater codification around factors such as audit committee members' independence and expertise as the means of "correcting" past weaknesses in the arrangements for audit committees. The most fundamental question concerning what difference audit committees make in practice continues to be an important area for research development. For future research we suggest (i) greater consideration of the organizational and institutional contexts in which audit committees operate; (ii) explicit theorization of the processes associated with audit committee operation; (iii) complementing extant research methods with field studies; and (iv) investigation of unintended (behavioural) as well as expected consequences of audit committees
Audit Committee chair characteristics and Earnings Management : Evidence from the UK
Full text linkThe primary objective of this study is to examine the impact of audit committee chair characteristics on earnings management. Previous studies have paid little attention to the audit committee chair characteristics and their effect on earnings management. The audit committee chair’s role is significantly essential to increase the ability of the audit committee to carry out their responsibilities effectively and drive the work of the audit committee (Ghafran & Yasmin, 2018). The audit committee chair has a greater responsibility than other members in the audit committee regarding the failure of the financial report (Ghafran & Yasmin, 2018). Thus, the chair of the audit committee plays a significant role in influencing the quality of financial reporting. However, previous audit committee researches do not distinguish the audit committee chair’s characteristics from other audit committee members. Thus, this study goes further to highlight the audit committee chair using a sample selected from the FTSE 350 firms listed on the London Stock Exchange over the period 2000 - 2015. This study measures earnings management using accrual and real earnings management based, the results show that audit committee chair age, social networking and industry are positively associated with earnings management. However, audit committee chair tenure, pre-tenure, education, non-foreign and accounting and finance expertise have significant adverse effects on the level of earnings management.Based on real earnings measurement, the findings show that tenure, pre-tenure, accounting and finance experience and non-foreign are significantly and negatively associated with earnings management. However, social networking and education are significantly and positively associated with earnings management. These findings consequently contribute to existing literature and policymaking by enabling the UK and other countries that have a similar environment to make better decisions regarding audit committee chiar by considering the characteristics of the audit committee when issuing audit committee regulations to improve the effectiveness of this committee and thereby, firms’ financial reporting
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