Influence of Family Ownership on Earnings Quality

Kim, Sang Ho; An, Yohan

doi:10.22452/ajba.vol12no2.3

Cited by 7 publications

(12 citation statements)

References 45 publications

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“…It shows that audit independence does not influence on high quality of audit. This result can be interpreted as follows that the appointment of audit committee member is highly influenced by family owner because most of Korean firms are dominated by large family ownership or controlling shareholders such as Chaebol (Kim and An, 2019;Kwon and Park, 2021). Therefore, H2 is not accepted.…”

Section: Resultsmentioning

confidence: 97%

Does Quality of Audit Committee Enhance Audit Quality?

An¹

2023

J. Professional Business Review

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Purpose: This study investigates whether quality of audit committee affects audit quality of Korean listed firms using panel data during the period 2008 to 2018. Theoretical framework: Recent studies show that characteristics of audit committees such as size, activity, and expertise have a significant impact on the monitoring of the financial reporting process (He and Yang, 2014; Asiriuwa et al. 2018). Therefore, it is necessary to carry out systematic empirical studies to understand the effectiveness of the audit committee from various perspectives. Design/methodology/approach: The quality of audit committee is classified into four categories: 1) activity, 2) independence, 3) expertise, and 4) the presence of female audit committee member. Audit quality is measured by auditor size and accruals quality. Findings: This study finds that activity and expertise of audit committee enhance audit quality whereas independence of audit committee does not affect audit quality. The female audit committee member partially enhances audit quality. Research, Practical & Social implications: This study suggests that the high quality of the audit committee enhances the audit quality and increases the accounting transparency of the firm. Originality/value: The empirical results of this study suggest that firm should concentrate the optimal composition of the audit committee, not simply the establishment of the audit committee.

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Section: Resultsmentioning

confidence: 97%

Does Quality of Audit Committee Enhance Audit Quality?

An¹

2023

J. Professional Business Review

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“…Furthermore, most banks in the GCC countries are owned by GCC governments as well as by connected ownership of families. The research on the degree to which financial decisions are influenced by the ownership of families is vast (see for example Kim et al (2019). All this creates a state in which corporate managers have no concern to financial constraints, hence, the optimal financial practices with respect to trade policies becomes of less important.…”

Section: Discussion Of the Resultsmentioning

confidence: 99%

Are Trade Policies Performance Enhancing? The Special Case of the GCC Countries

Alshammari

2020

IJFR

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Purpose – The purpose of this study is to investigate the extent to which trade policies affect the performance of firms in the six countries of the Gulf Cooperation Council (GCC): Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. The finance literature, theoretically and empirically, postulates that the efficient management of trade policies (i.e., trade debtors, inventory, and trade credit policies) relates positively to corporate performance. This study, however, conjectures that in a different and distinct business setting, corporate performance might not be related to how a firm manages its trade policies, or at least not significantly.Design/Methodology/approach – The study sample is comprised of all nonfinancial firms in the Gulf Cooperation Council (GCC) countries. The study uses several ratios in the literature to proxy for trade policies and corporate performance. It also employs related and alternative econometric models in order to corroborate the results.Findings – Contrary to a documented worldwide evidence, the results of the study reveal that short-term trade policies – specifically, trade debtors, inventory, and trade credit – have an insignificant or at most a trifling effect on corporate performance, for a set of nonfinancial listed firms in all six GCC countries.The results are robust to the econometric model, the profitability measure, and the country. This is probably because most GCC corporate managers have no concern about being financially constrained, which leads to less attention to aligning the optimal levels of working capital with the daily financing needs. Most firms in Gulf Cooperation Council (GCC) countries receive generous subsidies from their governments as part of lavish payments, in order to carry out development projects and other services for governmental agencies. The results of this study should be of great importance to GCC corporate managers and investors.Originality/Value – The study contributes to the literature by demonstrating that different cultural managerial practices might skew the already-established association among the financial variables and, hence, bring up new evidence. Also, the study implicitly suggests that further research in this area could reveal additional anomalous findings.

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“…Regarding the analysis of the influence of ownership structure on the association between earnings quality and RPTs, several studies (e.g., Hashim and Devi 2008;Ji et al 2015;Kim and An 2019;Abd Alhadi et al 2020;Oyebamiji 2021) indicate that earnings quality differed among companies with different ownership structures, including institutional ownership, ownership concentration, foreign ownership, managerial ownership, and state ownership. Ferdi and Rossieta (2019) explore the relationship between RPTs and institutional ownership structure, showing there is a substantial positive relationship between RPTs and institutional ownership.…”

Section: The Moderating Effect Of Ownership Structure On the Associat...mentioning

confidence: 99%

“…Several studies (e.g., Hashim and Devi 2008;Ji et al 2015;Kim and An 2019;Abd Alhadi et al 2020;Oyebamiji 2021) investigate how earnings quality is affected by RPTs. Previous studies have generally agreed that there is a positive association between earnings quality and ownership structure.…”

Section: Introductionmentioning

confidence: 99%

The Moderating Effect of Ownership Structure on the Relationship between Related Party Transactions and Earnings Quality: Evidence from Saudi Arabia

Alsultan,

Hussainey

2024

IJFS

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This paper seeks to investigate how earnings quality is affected by related party transactions (RPTs). The research also examines the impact of ownership structure as a moderating variable on this relationship. Panel data with the firm fixed effects model are utilized in the paper. A sample of 91 non-financial companies listed on the Saudi Stock Exchange between 2018 and 2022 were included, resulting in 429 observations of company performance over that time period. This paper finds that there is a negative association between RPTs and earnings quality. Furthermore, the study found that the adverse effect of RPTs on earnings quality is intensified when there is managerial ownership and institutional ownership as moderating variables. The study’s conclusions are robust and reliable, as the sensitivity analysis results reinforce those of the basic analysis. To the authors’ knowledge, there is relatively little available evidence on the connection between RPTs and their correlation with earnings quality, particularly in the context of ownership structure acting as a moderating variable. Moreover, the study’s findings hold important implications for enhancing earnings quality in developing economies. To the authors’ knowledge, no studies have been conducted in Saudi Arabia thus far to investigate the impact of ownership concentration, institutional ownership, managerial ownership, foreign ownership, and state ownership on the association between RPTs and earnings quality. Therefore, this paper expands the literature by modeling how the interaction between ownership structure and related party transactions may influence earnings quality. In this way, the authors contribute to the body of knowledge by unveiling a more robust control mechanism, particularly in developing economies with ineffective markets for corporate control.

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Influence of Family Ownership on Earnings Quality

Cited by 7 publications

References 45 publications

Does Quality of Audit Committee Enhance Audit Quality?

Does Quality of Audit Committee Enhance Audit Quality?

Are Trade Policies Performance Enhancing? The Special Case of the GCC Countries

The Moderating Effect of Ownership Structure on the Relationship between Related Party Transactions and Earnings Quality: Evidence from Saudi Arabia

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