The main aim of this study is to provide empirical evidence examining how outsourced internal audit function (IAF) providers are associated with audit efficiency, and how such providers interact with high‐quality external auditors. We use a sample of 711 observations for companies listed on the Muscat Security Market during the period 2005–2014. Based on pooled regression, we find that audit efficiency is significantly improved when the IAF provider is from a Big4 audit firm, whereas a non‐Big4 audit firm IAF provider is associated with reduced audit efficiency. Furthermore, we find evidence suggesting significant interaction between the external auditor and IAF in relation to audit efficiency if the outsourced IAF provider is from a Big4 audit firm. In additional analysis, we construct a new measure for audit efficiency, dividing the IAF providers into Big4, second tier, and other non‐Big4, and consider the time of connection between such providers and their clients. We still observe that Big4, as an outsourced IAF provider, is more significantly associated with audit efficiency than other types of IAF provider. This paper is important because there is currently little evidence concerning the type of outsourced IAF provider; it contains useful information for auditors, companies, and regulators.

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Purpose The purpose of this study is to report on the level of audit committee (AC) effectiveness on the top capitalized firms in GCC countries and to empirically investigate the hypothesized influence of ownership types on the level of AC effectiveness. Design/methodology/approach The empirical data were drawn from annual reports of 119 top listed firms in Gulf Co-operation Council (GCC) nations at the end of 2011. Ordinary least squares regression analysis was constructed to examine the relationships between ownership types and the level of AC effectiveness. Findings The findings revealed that family, government and institutional ownership, in addition to board independence, all have significant positive association with AC effectiveness, and they serve as a complement to AC effectiveness. Research limitations/implications The findings of the study are important for policy makers and regulators as they could use them to understand the relationship between different corporate governance mechanisms and formulating best strategies that would help them to improve and adopt an optimal governance system constituted from interacting governance mechanisms. Originality/value This study is one of few that have examined the interaction between different corporate governance mechanisms. It provides insights about the relationship between AC effectiveness and other governance mechanisms in the GCC context.

Purpose Research investigating the association between religiosity and earnings management has concentrated on accruals-based earnings management, relying heavily on society’s religiosity, but it has neglected the interaction between religiosity and formal monitoring mechanisms. This study aims to examine how the religiosity and accounting expertise traits of top leaders are associated with real earnings management (REM) and how they interact to eliminate these practices. Design/methodology/approach Using a sample of 943 year-observations from more religious settings, this paper collects data for four measures of REM, and for religiosity and accounting expertise of audit committee (AC) chair and chief executive officer (CEO). Multivariate regression is used to test the study hypotheses. Findings The findings are consistent with the predictions that religious top leaders are not associated with lower REM, while top leaders with accounting expertise, in some cases, are associated with lower REM. This paper also finds that a leader with religious belief and accounting expertise dramatically lowers REM. These findings are robust under a battery of sensitive analyzes. In an additional analysis, this paper observes the interaction effect between these two traits is strengthened if the board chair is religious, and persists even for larger firms or those with a highly concentrated ownership structure. Originality/value The paper provides evidence that may serve a variety of decision-makers. It is the first to show that the interaction between religiosity and expertise is crucial in curbing REM. It also provides the first evidence for the role of the AC chair in relation to REM.