Ownership Structure and its Endogeneity Effect on the Quality of Financial Reporting

Alsmady, Ahnaf Ali

doi:10.6007/ijarbss/v8-i3/3946

Cited by 4 publications

(7 citation statements)

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“…Their connivance with managers in earnings smoothing is used to display a script-like performance in the AGM in favour of the manager's financial report (Ongore et al, 2011). However, these features are mostly found in transient investors, unlike dedicated investors that are not likely to connive with the managers to defraud the firm (Alsmady, 2018).…”

Section: Resultsmentioning

confidence: 99%

“…EM is widely used in the measurement of FRQ. Managers typically use it to make changes to figures in the financial statement (Alsmady, 2018). They claim that EM occurs when managers use subjective judgment in financial reporting and transaction structuring to alter financial reports in order to mislead some stakeholders about the company's underlying economic performance or to influence contractual outcomes that are based on reported accounting practices.…”

Section: Accrual Modelmentioning

confidence: 99%

“…Management may be more motivated to distort financial statements. According to Alsmady (2018), monitoring is more difficult if the company is owned by managers (Dou et al, 2018). Managers with lesser stock ownership, on the other hand, are more likely to alter accounting statistics in order to overcome restrictions imposed on accounting-based pay contracts, according to agency theory.…”

Section: Managerial Ownership and Financial Reporting Qualitymentioning

confidence: 99%

“…Further, the modified Jones model by Dechow et al (1995) is considered as one the best and most powerful models for testing EM in Nigeria (Alsmady, 2018). The model recognizes accounting variations in income receivables in the event period.…”

Section: Earnings Management Modelmentioning

confidence: 99%

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Ownership Structure and Financial Reporting Quality in Listed Non-Financial Firms in Nigeria

2021

ijafr

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The objective of this study is to appraise the effect of the ownership structure on the quality of financial reporting in Nigeria. The study used data from 41 non-financial firms listed on the Nigerian Stock Exchange (NSE) for the 2011 to 2019 period. The Generalised Method of Moments (GMM) technique was adopted for the study which is vigorous to the threat of heteroskedasticity and endogeneity. The study findings revealed that institutional and foreign ownership has a significant negative relationship with earnings management, thereby, improving the reporting quality. However, the results show that managerial ownership has an insignificant negative relationship with earnings management. The finding of this study is also robust in scope concerning the issue of unobserved heterogeneity which prior studies have failed to address. Thus, future corporate governance reforms should recognize and sustain these efforts. The study recommends that Firms should expand their institutional and foreign ownership by providing sufficient shares to them. This is important because they frequently deploy their professionalism and wealth of experience to the firms towards meeting corporate goals and agitation of good reporting practice. On the other hand, Firms should ensure that the shareholding of the insider managers is not too high in such a way that the proportion of their shareholding should be minimal. Their shares should not exceed 10% of the total shareholding in the company as it was found to be among the variables that reduce firms' performance.

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Section: Resultsmentioning

confidence: 99%

Section: Accrual Modelmentioning

confidence: 99%

Section: Managerial Ownership and Financial Reporting Qualitymentioning

confidence: 99%

Section: Earnings Management Modelmentioning

confidence: 99%

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Ownership Structure and Financial Reporting Quality in Listed Non-Financial Firms in Nigeria

2021

ijafr

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“…In a market such as Jordan which is unique in terms of low economic development and a royal family control, the corporate governance factors and companies' performance have been investigated in several pieces of research such as (Saidat et al, 2019;Mansur, 2018;Tawfeeq Yousif Alabdullah et al, 2014;Al-Najjar, 2010;Marashdeh, 2014;Alsmady, 2018a;Ali Alsmadi et al, (2014); Al-Smady, (2017); Alsmady, 2018b;Hussin et al, 2019). Studies on liquidity, profitability, and revenues can be referred to (Matar & Eneizan, 2018b); corporate social responsibility by (Qaisi & Finance, 2019;Alafi et al, 2012;Omar & Zallom, 2016); supply chain practices, environmental sustainability by (Jum'a et al, 2021); earning management, social and environmental costs disclosure by (Shahwan & Esra'a, 2021;Smirat et al, 2016); ownership structure by (Alabdullah, 2018); board of directors characteristics by (AlQudah et al, 2019) and other studies.…”

Section: Introductionmentioning

confidence: 99%

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

Alsmady

2022

J. Professional Business Review

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Purpose: This study examines the relationship between the accounting information quality, tax avoidance, and political connection in all Jordanian companies listed on Amman Stock Exchange. The current study also investigates the moderating effect of political connections on accounting information quality and company performance relationships. Further, the study examines the moderating effect of political connection on tax avoidance and company performance relationship. Theoretical framework: Political connections, tax avoidance, and the quality of accounting information affect a company's performance. According to the agency theory, reliable accounting information improves business performance and resources’ allocation efficiency by reducing information asymmetry. Additionally, the adverse effects of politics on companies are mitigated by accounting information quality. As a result, the cash flow is allocated effectively, improving the business's overall performance. Design/methodology/approach: The study uses the ordinary least squares (OLS) and applied moderated multiple regression (MMR). The sample data of this study includes 2266 company-years observations over the period 2008-2018 for all Jordanian companies listed on Amman Stock Exchange. The study compares accounting and market-based measurements of companies' performance (ROE, Tobin's Q). Findings: The study reveals consistent results among the measure. The results support the agency theory and found that accounting information quality reduces information asymmetry and positively affects companies' performance. Also, tax avoidance helps the companies to have more cash, and the results indicate a significant positive effect on companies' performance. In addition, the results support the agency theory argument and found that politics increase agency costs and negatively affect companies' performance. However, further analysis found that political connections sustain the positive effect of accounting information quality, which is a robust governance mechanism in Jordanian listed companies. Finally, the results found that tax avoidance with more political connections harms companies' performance. Research, Practical & Social implications: This study helps policymakers increase the governance mechanisms function in Jordanian listed companies. Also, the higher political relationship with the companies could be affected negatively on the Jordanian companies' achievement. Originality/value: The findings suggest several consequences for the fields of accounting and corporate governance. Additionally, the Middle East nations, including the Jordanian market, have had numerous economic difficulties that this study aids in resolving. For example, antagonistic political ties, information asymmetry, and insufficient allocation of financial resources.

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The effect of political connection on corporate tax avoidance: The moderating role of accounting information quality

Alsmady

2023

JGR

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This study examines the relationship between the political connection and tax avoidance in all Jordanian market companies, the relationship between accounting information quality and tax avoidance, and the moderating effect of accounting information quality between the political connection and tax avoidance relationship. The sample data of the study includes 206 companies, with a total of 2266 observations from the period from 2008 to 2018. The results indicated that the political connection positively correlates with tax avoidance, which is supported (Jensen & Meckling, 1976). The results of this study also indicated a significant negative association between accounting information quality and tax avoidance. Moreover, the moderating effect of accounting information quality on the political connection and tax avoidance relationship indicated a significant negative association with tax avoidance. Thus, the study supported the agency theory that governance mechanisms such as accounting information quality function led to the reduction of agency problems and reduce information asymmetry. The study finding supported Ward et al.’s (2009) argument and suggested that accounting information quality plays a substitute role rather than a complementary role in mitigating the agency problem. The outcomes of this study could assist the policymaker and companies in the importance of accounting information quality in disciplining political involvement in the Jordanian market.

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Ownership Structure and its Endogeneity Effect on the Quality of Financial Reporting

Cited by 4 publications

References 0 publications

Ownership Structure and Financial Reporting Quality in Listed Non-Financial Firms in Nigeria

Ownership Structure and Financial Reporting Quality in Listed Non-Financial Firms in Nigeria

Accounting Information Quality, Tax Avoidance and Companies' Performance: the Moderate Role of Political Connection

The effect of political connection on corporate tax avoidance: The moderating role of accounting information quality

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