Audit Committee Independence and Auditor Reporting for Financially Distressed Companies: Evidence From an Emerging Economy

Saeed, Abubakr; Ali, Qasim; Riaz, Hammad; Khan, Muhammad Asif

doi:10.1177/21582440221089951

Cited by 7 publications

(16 citation statements)

References 87 publications

(167 reference statements)

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“…(2016) that a sample dominated by institutional setting significantly impedes the impact of RCI. A possible explanation relevant to Pakistan was also suggested by Saeed et al. (2022), who discuss a difference between procedural independence and substantive independence.…”

Section: Resultsmentioning

confidence: 97%

“…For that reason, companies place independent members in the board committees to fulfill that procedural requirement. Saeed et al. (2022) claim that this is merely a procedural independence and that it is even counterproductive.…”

Section: Resultsmentioning

confidence: 98%

“…These requirements require banks to have independent directors on the board. In Pakistan, the inclusion of independent directors on the board, and hence its subcommittees, is a mere formality that questions the genuineness of the variable (Saeed et al. , 2022).…”

Section: Discussionmentioning

confidence: 99%

“…(2016) identify the need to investigate this association in emerging economies that have a unique setting in terms of their institutional dominance and weak enforcement of governance regulations, such as Pakistan. Accordingly, Saeed et al. (2022) question the genuineness of Pakistan's corporate governance mechanisms, as they deem Pakistan's regulatory framework to be relatively weaker than that of other emerging economies.…”

Section: Introductionmentioning

confidence: 99%

“…Second, Al-Hadi et al (2016) identify the need to investigate this association in emerging economies that have a unique setting in terms of their institutional dominance and weak enforcement of governance regulations, such as Pakistan. Accordingly, Saeed et al (2022) question the genuineness of Pakistan's corporate governance mechanisms, as they deem Pakistan's regulatory framework to be relatively weaker than that of other emerging economies. In addition, Gull et al (2022) suggest that risk disclosure in Pakistan is at a preliminary stage, which makes the investigation of its possible determinants interesting in the context of Pakistan.…”

Section: Introductionmentioning

confidence: 99%

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Risk committee characteristics and risk disclosure in banks: evidence from an emerging economy

Hasan

Sufi

Hussainey

2023

JAAR

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PurposeThis study aims to investigate the impact of risk committee characteristics on the risk disclosure of banking institutions in an emerging economy, Pakistan.Design/methodology/approachThe data are collected through a manual content analysis of 21 banks regulated by the State Bank of Pakistan over the period 2011–2020. The study utilizes the generalized least square (GLS) regression model as the method of analysis.FindingsThe study finds that risk committee size is positively associated with risk disclosure, which is in line with agency theory. However, risk committee independence and risk committee gender diversity are negatively associated with risk disclosure. This contradicts the theoretical perspective and is explained by the weak regulatory framework of Pakistan.Research limitations/implicationsThis study was carried out in a single research setting, which limits the generalizability of its findings to other developed and emerging economies.Practical implicationsThe results provide valuable insights for regulators by identifying the attributes that require regulatory focus to strengthen risk committees and enhance risk disclosure practices within the banking sector of Pakistan. The findings highlight the effectiveness of the risk committee size, call for fully independent risk committees and encourage greater representation of women in these committees.Originality/valueThis study contributes to the corporate governance literature by empirically examining the risk committee characteristics and their impact on the risk disclosure of banks in an emerging economy. Moreover, this study contributes to theory by utilizing upper echelon theory in addition to agency theory as the motivation for the study.

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Section: Resultsmentioning

confidence: 97%

Section: Resultsmentioning

confidence: 98%

Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Risk committee characteristics and risk disclosure in banks: evidence from an emerging economy

Hasan

Sufi

Hussainey

2023

JAAR

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The impact of corporate governance on narrative disclosure tone: a machine learning approach

Hasan,

Sufi,

Elmarzouky

et al. 2024

JAAR

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PurposeThis study examines the influence of corporate governance indicators (CGIs) on the textual tone of nonfinancial firms in a developing economy.Design/methodology/approachThe data from 1,250 annual reports of listed nonfinancial firms in Pakistan are collected for 10 years. The narrative disclosure tone (NDT) is derived using the sentiment analysis of annual reports, resulting in six distinct NDT scores. The CGIs data are also extracted from the annual reports. The fixed effects model is used as the primary analytical tool, supplemented by machine learning-based linear regression. System GMM and two-stage least squares regressions are employed for robustness checks.FindingsThe findings reveal that most CGIs significantly influence all six NDTs. These results align with the existing theoretical literature, except those related to audit committee independence and gender diversity.Research limitations/implicationsThe study is limited to the use of annual reports as a source of narrative disclosures. Future research might employ other sources, such as earning press releases and social media.Practical implicationsWithin the unique regulatory environment of Pakistan, the study offers insights for regulators to enhance the efficacy of independent directors, discourage concentrated ownership and promote the inclusion of women in board subcommittees to establish the authenticity of textual disclosures.Originality/valueThe study adds to the limited literature on the determinants of NDT. It underscores the importance of understanding textual tone for informed investor decision-making and restoring investor confidence. Moreover, it contributes by focusing on six NDTs and exploring the interplay between CGIs and textual tone.

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Critical Factors Influencing Firms' Risk-Taking Behaviour: CEO Characteristics and the Moderating Role of the Audit Committee

Arulanandam¹,

Selvan²,

Tong³

2023

CEBR

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This paper aims to explore the effects of chief executive officer (CEO) characteristics on managerial risk-taking behaviour and the moderating impact of audit committee (AC) ownership and ethnicity in this relationship. The underlining theory employed in this study is the upper echelons theory (UET). Data were hand-collected from annual reports of the top 100 Malaysian PLCs over 2015-2020 and were analysed through multiple regression analysis and Hayes' process moderation analysis. The findings suggest that CEO age negatively affects risk-taking. The results, however, do not support the use of CEO tenure and gender as proxies for managerial risk-taking behaviour. AC ownership has a significant positive moderating effect on the relationship between CEO age, tenure, gender and risk-taking. Contrarily, AC ethnicity only significantly moderates the association between CEO gender and risk-taking. This study further adds to the existing literature considering these independent variables. Implications for Central European audience: This study serves as a good yardstick for exploring the effects of CEOs' characteristics. While this study is within the Malaysian context, it is undoubtedly useful in the Central European context. Risk-taking behaviour can be dispersed over all sectors, especially as this study employs the UET theory. The findings would set a comparison for corporations in Central European countries.

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Audit Committee Independence and Auditor Reporting for Financially Distressed Companies: Evidence From an Emerging Economy

Cited by 7 publications

References 87 publications

Risk committee characteristics and risk disclosure in banks: evidence from an emerging economy

Risk committee characteristics and risk disclosure in banks: evidence from an emerging economy

The impact of corporate governance on narrative disclosure tone: a machine learning approach

Critical Factors Influencing Firms' Risk-Taking Behaviour: CEO Characteristics and the Moderating Role of the Audit Committee

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