Internal control quality and information asymmetry in the secondary loan market

Mahdy, Dina El; Park, Myung Seok

doi:10.1007/s11156-013-0389-1

Cited by 19 publications

(7 citation statements)

References 88 publications

(221 reference statements)

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“…Second, the role of information asymmetry in loan contracting has long been of interest to scholars in accounting and financing. Findings demonstrate that borrowers tend to receive less favorable contract terms when there is a lack of publicly available information (El-Mahdy and Park, 2014;Embong, 2014). Specifically, Hasan and Song (2014) find that firms in emerging markets with superior public disclosures faced lower borrowing costs and obtained more favorable non-price terms, such as loans of larger amounts and longer maturities.…”

Section: Financial Reporting and Bank Loan Contractingmentioning

confidence: 97%

FASB Disclosure and Bank Loan Contracting: Evidence from Derivative and Hedging Footnotes

Chen¹,

Zhou²,

Han

2021

SSRN Journal

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Section: Financial Reporting and Bank Loan Contractingmentioning

confidence: 97%

FASB Disclosure and Bank Loan Contracting: Evidence from Derivative and Hedging Footnotes

Chen¹,

Zhou²,

Han

2021

SSRN Journal

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“…Similarly, several authors argue that an effective information and communication system promptly provide accurate and pertinent information to the various stakeholders (El-Mahdy & Park, 2014;Peterson, 2018;Badara & Saidin, 2013). Martin et al (2014) underlined the necessity of information and communication in supporting the various segments of internal control to function efficiently.…”

Section: Information and Communication And Organizational Effectivenessmentioning

confidence: 99%

“…The agency theory covers the optimal approach to arrange interactions in which the job is defined by the principal or shareholder and the agent or manger sees to its performance (Connelly, Hoskisson, Tihanyi, & Certo, 2010;Koch, Ostner, Peisker, & Sch€ ulke, 2009). The agency theory is premised on mental processes and human preferences (El-Mahdy & Park, 2013;Sarens & Abdolmohammadi, 2011). Chang, Chen, Cheng, and Chi (2019) postulate that internal control systems help to maximize shareholder wealth by reducing agency cost.…”

Section: Introductionmentioning

confidence: 99%

Evaluating the impact of internal control systems on organizational effectiveness

Otoo,

Kaur,

Rather

2023

LBSJMR

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PurposeInternal control systems are critical to an organization's efficiency and promotes the adherence to norms and rules. The purpose of this study is to evaluate the impact of internal control systems on banking industry effectiveness.Design/methodology/approachData were collected from 15 commercial and 20 rural banks. The hypothesized relationships were supported by the data. A structural equation modeling was applied in testing the conceptual model and hypothesis. Confirmatory factor analysis was conducted to establish validity and reliability of the dimensions.FindingsThe results show that organizational effectiveness was significantly impacted by three dimensions of internal control systems: control activities, control environments and risk assessment. However, the impact of monitoring of control on organizational effectiveness was not significant. The results also show a nonsignificant impact of information and communication on organizational effectiveness.Research limitations/implicationsSince the current study concentrated on the banking sector with its distinct characteristics, the generalizability of the conclusions may be limited.Practical implicationsThe study's findings may aid decision-makers and stakeholders in the adoption, designing and implementation of proactive internal control system to enhance operational efficiency, effectiveness and competitive advantage.Originality/valueThe study advances the literature by empirically evidencing that internal control systems impact organizational effectiveness.

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“…where CFOt = Operating cash flow of company i in year t; Prodt = Production costs of company i in year t; Disexpt = Corporate discretionary expenses i in year t; At-1 = Total assets of the company at the end of year t-1; St = Sales of the company at the end of the year Information Asymmetry in this study is measured by the average annual bidask spread (El-Mahdy and Park 2014;Bharath et al 2008) as calculated with the following formula: PREAD = (aski,t -bidi,t) / {(aski,t + bidi,t)/2} x 100 where Aski,t = the highest ask price of stock of company i that happened on t day; Bidi, t = the lowest bid price of the company's stock i that occurred on the day t harga ask…”

Section: Normal Discretionary Expenses By Using the Following Regression Equationmentioning

confidence: 99%

Internal audit role on information asymmetry and real earnings management

Jasman

Amin

2017

JAAI

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This study aims to investigate the effect of information asymmetry toward real earnings management which are moderated by quality of internal audit function. The research design is quantitative method using secondary data. The sample used in this study consisted of 116 manufacturing companies which are listed on Indonesian Stock Exchanges. Earnings management through real activities manipulation which is also called real earnings management is proxied with three patterns: cash flow from operation (CFO), production costs, and discretionary expenses. The result shows that information asymmetry has a positif and significant effect toward real earnings management in the pattern of cash flow from operation and production costs. Meanwhile, information asymmetry has no effect toward real earnings management in the pattern of discretionary expenses. This research also found that quality of internal audit has significant effect in mitigating the effect of information asymmetry toward real earnings management in the pattern of cash flow from operation and production costs. Internal audit quality does not play an important role in alleviating real earnings management in discretionary expenses pattern.

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Internal control quality and information asymmetry in the secondary loan market

Cited by 19 publications

References 88 publications

FASB Disclosure and Bank Loan Contracting: Evidence from Derivative and Hedging Footnotes

FASB Disclosure and Bank Loan Contracting: Evidence from Derivative and Hedging Footnotes

Evaluating the impact of internal control systems on organizational effectiveness

Internal audit role on information asymmetry and real earnings management

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