Does board structure improve financial reporting quality? Evidence of real earnings manipulation among Pakistani firms

Abstract

The purpose of this study was to understand organizational change initiated in the public sector of Pakistan. This study investigated the case of reform initiative of Computerized driving licensing authority (CDLA) of Khyber Pakhtunkhwa Traffic Police (KPTP). Keeping in view the research questions, an in-depth study was conducted through the interpretivist research philosophy. Thirty semi-structured interviews were conducted from the top, middle and lower management (including permanent staff and project staff). Moreover, the secondary source of information was also used. For data analysis purpose, thematic networking technique was adopted as it helps in summarizing the whole set of information and also in presenting the codes in a simplified manner. Findings of the study show that change was planned and implemented in isolation from the internal stakeholders. Neither planned nor emergent change approach was adopted. New Public Management (NPM) features were evident, however, they were not planned properly. Moreover, the reasons for change, types and approach to change, causes of resistance to change, issues in implementation, the outcome of organizational change, and the role of technocrats were also identified. This study contributes theoretically by adding into the body of knowledge from the developing country perspective as well as by studying change in an autocratic system of police. Keywords: Organizational change, public sector reforms, thematic networks, new public management, qualitative methodology.

Does Corporate Governance Affect Financial Reporting Quality? Evidence from Listed Entities in Sri Lanka

“…Companies with large director boards boost the transparency and credibility of the accounting data by acting as a strong controlling mechanism. Most of the literature (Phuong et al, 2020;Shah, Rashid & Shahzad, 2019) supports the argument that a higher board size would be preferred for a lesser board size to generate high-quality financial reporting. Similarly, it was evident that the independent members of BODs voluntarily disclose more relevant information on corporate financial administration and thereby indirectly serve to maximize shareholders' value (Alzoubi 2014;Ibrahim & Jehu, 2018) which ultimately supports a positive impact on FRQ.…”

“…When investigating the relationship between Board Size (BDSIZE) and FRQ variety of views was highlighted. In line with the agency theory, companies with large director boards boost the transparency and credibility of the accounting data by acting as a strong controlling mechanism (Phuong et al, 2020;Shah, Rashid & Shahzad, 2019). In contrast, Hassan (2011) and Paulinus et al (2017) have expressed that large board size misplaced the strong governance as they have a lower level of coordination and a higher probability of issues related to free-riders.…”

“…CEO duality emphasizes the situation where one person simultaneously carries the positions of both chairman of the board and CEO. Agency theory advocated the importance of separation between these two persons to ensure better management and satisfy the shareholders' interests (Shah et al, 2019). Alzoubi (2014) has stated that CEO duality has negatively impact on financial reporting quality measured through abnormal accruals, as it damages the firm value and sustainability of the firm in long run.…”

“…The extant literature provides evidence that firms with a higher proportion of independent directors report lower discretionary accruals, thus enhancing overall FRQ (Hasan, Kassim & Hamid, 2020;Kibiya, Che-Ahmad & Amran, 2016). However, Majiyebo et al (2018) and Shah et al (2019) in their studies, have documented that role of the independent audit committee is rather limited in controlling and monitoring the management behavior over reducing earnings manipulation and therefore present an adverse association between audit committee independence and FRQ.…”

Does Ownership Structure Improve Financial Reporting Quality? Evidence of Real Earnings Manipulation among Pakistani Firms

“…The credibility of financial information and accounting income have gained a lot of attention among companies and regulatory bodies in recent time around the world in the framework of corporate control (Rafique et al 2017). Strong CG mechanism mitigates the conflict between managers and shareholders (Shah et al 2019). According to Lins and Warnock (2004), in general, the mechanisms that can control the opportunistic behavior of management, can be categorized into two types.…”