The effect of internal controls on financial reporting quality in Iranian family firms

Dashtbayaz, Mahmoud Lari; Salehi, Mahdi; Safdel, Toktam

doi:10.1108/jfbm-09-2018-0047

Cited by 34 publications

(46 citation statements)

References 76 publications

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“…COSO which published the "Internal Control Integrated Framework" which has designed to help businesses establish, assess and enhance their internal control. The COSO framework defines internal control as a process, carried out by the board of directors, the administration and other personnel of an entity, designed to provide "reasonable security" with respect to the achievement of objectives, including the effectiveness and efficiency of the operations, the reliability of financial reports, and the compliance with applicable laws and regulations (Lari Dashtbayaz, Salehi, & Safdel, 2019). The COSO internal control framework consists of five interrelated components as control environment, risk assessment, control activities, information and communication, and monitoring derived from the way in which the administration manages a business (Hazami-Ammar, 2019).…”

Section: Internal Control Effectivenessmentioning

confidence: 99%

Internal Control Effectiveness and Business Survival: Evidence from Thai Food Businesses

Phornlaphatrachakorn¹,

Kalasindhu²

2020

JAFEB

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This study aims at investigating the effects of internal control effectiveness on business survival of food businesses in Thailand through the mediators of productivity improvement and value creation. In this study, 155 food businesses in Thailand are the samples of the study. The results show that internal control effectiveness has a significant influence on productivity improvement and business survival. Productivity improvement critically affects value creation and business survival while value creation is an important determinant of business survival. However, internal control effectiveness has no relationship with value creation. Also, productivity improvement explicitly mediates the internal control effectiveness-business survival relationships. In summary, internal control effectiveness can enhance firms' sustainable competitive advantage, superior performance and long-term survival. Firms need to focus on internal control effectiveness through investing their assets and resources and utilizing their abilities, competencies and capabilities in order to continuously develop and improve their appropriate concepts and characteristics in an organization. Better internal control effectiveness definitely leads to more long-term survival. To generalize the research results, future research needs to collect data from other businesses and industries. Increased response rate of the study is important for future research to verify and confirm the research results.

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Section: Internal Control Effectivenessmentioning

confidence: 99%

Internal Control Effectiveness and Business Survival: Evidence from Thai Food Businesses

Phornlaphatrachakorn¹,

Kalasindhu²

2020

JAFEB

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“…Thus, authors conclude that in FFs, the agency's conflicts between family owners and managers are less pronounced and they are not adequately motivated to maximize their personal interests and influence the financial reporting process. On the other hand, in the same stock exchange market (Iran), Lari Dashtbayaz et al (2019) find no relationship between family ownership and FRQ and that the control of equity owners over the firms' operation does not improve the level of internal controls. The supply of higher earnings quality attributable to the alignment effect, however, may be mitigated by the lower demand for higher earnings quality if users of financial statements take it for granted that FFs have stronger corporate governance.…”

Section: Literature Reviewmentioning

confidence: 89%

Better with age: financial reporting quality in family firms

Tommasetti

Macedo

Carvalho

et al. 2019

JFBM

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Purpose The purpose of this paper is to contribute to the literature on financial reporting quality (FRQ) within family firms (FFs), assessing whether longevity can determine a different propensity to earning management (EM) behaviors. Design/methodology/approach The sample, composed by Italian and Brazilian listed family (and non-family) firms, is segregated into old and young. For each subsample, unsigned discretionary accruals are calculated, using two different EM models. A linear regression model is then proposed, together with some robustness tests, to confirm the research hypothesis. Findings The outcome is that, within FFs, the entrenchment effect seems to be diminishing with the company’s age, up to become lower than the alignment effect. With some caveat, research also demonstrates that old FFs are more propense to supply higher FRQ than any other subsample group. Research limitations/implications The authors demonstrated that, in terms of EM decision process, FFs become virtuous just with time. More research is needed to evaluate the impact of the share and management control separately and to analyze different generation segmentation. Practical implications This paper could help non-family stakeholders, as it shows that different company types (family vs non-family), at a different stage of the life-cycle (young vs old) have a different attitude toward FRQ. On the other hand, family owners could exploit the longevity as a value driver. Originality/value This paper suggests that agency theory and socio-emotional theory are complementary in explaining the family control role in earnings management decisions. The study also contributes to the debate of FF homogeneity and on risk behavior in FFs, often portrayed as having a patient capital.

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“…The study [11] investigated the effect of internal controls on financial reporting quality in Iranian family firms. The findings revealed that weakness in internal controls has a significant negative relationship with financial reporting quality.…”

Section: Empirical Reviewmentioning

confidence: 99%

Internal Control Systems and Quality of Financial Reporting in Insurance Industry in Nigeria

Ajao¹,

Oluwadamilola²

2020

JFA

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In recent years many organizations have realized the importance of the role of directors, audit committee, internal auditors and external auditors in preparing and presenting quality financial reports to all stakeholders. In Nigeria, the performance and the quality of financial reports of companies in the insurance industry is dependent on the efficiency and effectiveness of the internal control system. This paper studied the impact of internal control systems and the quality of financial reporting in insurance industry in Nigeria. The research employed a survey research design. The study administered 100 questionnaires randomly to respondents, 98 questionnaires were returned and analysed. The data collected were analysed using descriptive and inferential statistics. The research hypothesis were analysed using regression analysis using Statistical Product and Service Solutions (SPSS 26). The results of the findings revealed that control environment, risk assessment, control activities, information and communication and monitoring has a statistical significant positive effect on quality of financial reporting of insurance industry in Nigeria. The study concluded that effective and efficient internal control system can affect the quality of financial reports of insurance industry in Nigeria.

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The effect of internal controls on financial reporting quality in Iranian family firms

Cited by 34 publications

References 76 publications

Internal Control Effectiveness and Business Survival: Evidence from Thai Food Businesses

Internal Control Effectiveness and Business Survival: Evidence from Thai Food Businesses

Better with age: financial reporting quality in family firms

Internal Control Systems and Quality of Financial Reporting in Insurance Industry in Nigeria

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