Purpose This paper aims to examine whether CEO/chair dual roles influence board monitoring-audit fees nexus. The impact of corporate governance on audit fees literature is lacking in the banking sector, which is subject to different regulations and reporting requirements to other sectors. The level and quality of external audit services are important not only to shareholders and customers but also for regulators’ reputations and public confidence. Design/methodology/approach Examining a sample of the US national commercial banks, this study fills the gap by empirically examining whether the attributes of internal corporate governance mechanisms, proxied by boards of directors and audit committee characteristics, are related to audit fees. We introduce two interaction variables to understand whether chief executive officer (CEO)/chair dual roles influence the relationships between board independence and audit fees on the one hand and between the audit committee and audit fees on the other hand. Findings We find that audit fees are positively associated with board independence, board size, CEO/chair dual role and audit committee financial experts. The results of the interaction variables indicate that boards with higher independence and more effective audit committees tend to demand higher audit quality, and consequently, pay higher audit fees to protect shareholders’ interests from potential power abuse by CEOs who also chair boards. Originality/value This study contributes to the literature by providing extensive understanding of the influence on audit fees of the independence of the board of directors and the effectiveness of the audit committees. The authors first examine the impact of each individual governance variable separately and then introduce two interaction variables. This study provides policymakers with insights into the existing relationships between audit fees and the banking sector governance structure.

Audit procedures are considered to be an external governance mechanism tool used by shareholders from an agency theory perspective. The empirical model is constructed to assess the theoretical and statistical relationship between audit lag and corporate governance characteristics over a period of four years (for FTSE 350 companies excluding financial institutions between 2007 and 2010). This paper studies the effect of corporate governance mechanisms, board of directors and audit committee, on audit report lag. The importance of this research comes from the few studies conducted regarding the relationship between corporate governance and audit report lag. It is crucial to understand the determinants of audit lag in order to minimize it as much as possible and accordingly generate timely information.

Purpose There is a growing attention toward the importance of women’s participation on corporate boards in enhancing board governance and decision-making quality. The literature lacks sufficient empirical evidence on the relationship between women’s involvement on boards and firms’ risk. The purpose of this paper is to investigate the influence of board gender diversity on firms’ risk. Design/methodology/approach This paper explores the influence of women’s participation on corporate boards on firms’ stock return volatility. The examined firms are all non-financial firms listed on the FTSE 350 index between 2008 and 2013. The Bloomberg database is used to collect the needed variables. Panel data are employed through a regression model to estimate relationships. One-step Arellano and Bond and the generalized method of moments are used to control for reverse causality and the existence of endogenous variables. Findings The results suggest that women’s participation on corporate boards favorably impacts firms’ risk by reducing firms’ stock return volatility. The authors also find that the influence of women on reducing stock return volatility is higher in four particular industries recognized by their close proximity to consumers (consumer goods, consumer services, health care, and utilities). Originality/value The study contributes to the growing literature on women on boards and offers solid empirical evidence of the correlation between board gender diversity and firms’ risk. The empirical results provide economical and statistical validity to the “voluntary business-led” approach of Davies reports and to the recommendation by the UK Corporate Governance Code 2014 on the favorable influence of board gender diversity for effective functioning.

Purpose The quality of financial reporting for the financial institutions is vital for the public, as the negative consequences of manipulated financial statements will not only affect shareholders but also the regulators’ reputation and the society at large. The purpose of this paper is to assess the association between different corporate governance mechanisms and their impact on audit and reporting quality. The gender factor is introduced from a diverse boards’ perspective to highlight any impact of female presence on the quality of financial statements. Design/methodology/approach The authors examine a sample of financial institutions listed on the FTSE-350 index for the years 2011 to 2015. The financial sector has its own and different regulations, and financial reporting framework and auditors are expected to behave into more scrutiny. Bloomberg database is used to obtain governance and financial data, while firms’ annual reports are used to collect audit fees and audit committee information. A panel data regression is used to test hypotheses. The authors also control for unobservable heterogeneity, reverse causality and endogeneity. Findings The results suggest that boards with larger size and higher independence pay higher audit fees to enhance the monitoring capacity and protect the wider group of stakeholders. The results also show that women on boards are likely to reduce the risk of manipulated financial statements, as women are more inclined toward truthfulness, cautiousness and conservatism. In addition, the reported results show that audit committees with more independent members are more inclined toward obtaining higher quality audit to enhance firm’s reporting quality. Originality/value Given the recent governments’ intervention to avoid financial institutions’ negative impact on the economy, this study is relevant and provide policymakers insights into the existing relationships between audit fees and financial institutions’ governance structure.

The general goal behind this research is to gain a better understanding of factors leading to dysfunctional behavior of auditors. The role of auditors has been a controversial issue especially after the recent accounting scandals (WorldCom, Enron, Paramalat SpA, Waste Management Inc., Xerox Corporation, and Société Générale). In relation to these scandals and lawsuits, a question is frequently asked “where were the auditors?” The survey we offer up for research is made up of 34 questions that are designed to analyse the perception of auditors and the cause of dysfunctional behavior. The object of this research is comprised of auditors positioned and employed at the Big Four audit firms in Kuwait. The selected sample is comprised from auditors at different levels ranging from audit trainees to audit partners. The so-called stakeholder theory talks about the relationship between audit behavior and audit firm practices with time deadlines and time budgets involved. It is generally accepted that the more auditors align their interests with firms’ measures and practices, the more a firm is capable of meeting general goals and objectives. Consequently, this may result in a less dysfunctional workplace conduct. Dysfunctional behavior (DB) is analysed against two signalling proxies of dysfunctional behavior; premature sign-off and under reporting of chargeable time. DB is analysed against time budget and time deadline pressures. The results suggest that the general belief among auditors is that the profession of accountancy predetermines their tendency to commit certain patterns of dysfunctional behavior. The results indicate that auditors understand that dysfunctional behavior is exercised by the majority of auditors. Dysfunctional behaviour is exercised with intention and it is not committed out of ignorance. One of the interesting findings is that auditors, at all levels, are concerned about their reputation. Thus, dysfunctional behavior is exercised, to a certain extent, without harming the quality of the audit work. Having our investigation conducted at the Big Four audit firms, we have come to the conclusion that there is a general difference in behavior patterns among perceptions of dysfunctional behavior and normal skeptic professional behavior. Audit firms should continuously conduct workshop and training events related to dysfunctional behavior. It is revealed that some auditors are not aware that certain practices are considered dysfunctional behavior or not. This research work can be used to aid audit practitioners to mitigate audit dysfunctional behavior. It highlights certain type of practices that is exercised in an improper way.

The 2007 financial crisis was the largest shock to the financial markets not only to the United States but the world as a whole since 1930. Lack of information and confusion in financial markets causes sharp declines in banks capitalization. The link between stock price behavior and the content of social disclosure is lacking in the literature and there is no clear understanding whether they are valued or disregarded by financial markets. CSR is the voluntary interaction between the firm and its stakeholders through addressing their social and environmental concerns with business activities. This paper contributes to the literature by drawing conclusions on whether CSR disclosure, which communicates firm involvement and level of commitment to society, shows improvement on banks' stock prices. Banks' social behavior is equally important to investors and customers risk assessment on one hand, and to regulators' reputation and the public confidence in the banking system on the other hand. Poorly controlled and operated banks can impose extensive negative effects not only on investors but also on their societies; therefore, effective management manages risk not only through financial performance but also through reflecting their good citizenship. The research examines a sample of national commercial banks, as the banking sector was experiencing increasing pressure that scratched stakeholders and investors trust during the latest financial crisis. In addition to examining a unique sample of banks during 2009-2010, the study contributes by employing content analysis technique to measure the content; i.e. the existence and comprehensiveness; of CSR disclosure in banks' annual reports. We find that the informative content of CSR disclosure is appreciated by stock participants and is of value. The reported results signal investors' interest in and consideration to CSR disclosure when valuing assets. Moreover, our results suggest that management involvement and communication of their CSR activities through better disclosure content is a potential tool to enhance shareholders value. The documented results are likely to encourage banking institutions in the developing countries to invest and report on their social activities. Banking institutions may enhance their shareholders welfare by investing in effectual social engagements and considering the content of CSR disclosure rather than classifying social involvement as nonrewarding activity.JEL Classifications: M140, G120, G010

Purpose The purpose of this paper is to investigate factors leading to dysfunctional behavior. The role of auditors has been under scrutiny during recent accounting scandals. Auditors, among other parties, are sometimes to be blamed as a result of economic crisis periods. The paper highlights certain auditors’ behavior leading to dysfunctional acts. Design/methodology/approach The survey of this paper is made up of statements extracted from the performance appraisal templates used at the Big Four firms in the UK. Big Four auditors are expected to be under pressure more than non-Big Four auditors. The sample is stratified into non-experienced/experienced auditors to highlight any changes in the perception of dysfunctional behavior when the experience factor exists. Findings The paper finds that certain performance appraisal procedures are leading to dysfunctional acts. Accordingly, audit firms should develop other evaluation techniques that should serve their goals without pushing auditors for dysfunctional behavior. Originality/value This study links procedures embedded in the performance appraisals at the Big Four audit firms to dysfunctional behavior. Also, the study covers all lines of auditors to understand how the perception toward dysfunctional behavior differs when auditors gain experience.

Purpose The purpose of this paper is to identify differences in auditors’ dysfunctional behaviour when expecting performance appraisal. Its main aim is to examine variances across countries; UK vs Kuwait. Also, it identifies differences between experienced and inexperienced auditors. Design/methodology/approach The paper focuses on dysfunctional audit behaviour (DAB) where premature sign-off and under-reporting of chargeable time are chosen as the two main signalling proxies. A survey made up of statements included in performance appraisal templates is distributed among auditors working for the Big Four firms in both, the UK and Kuwait. Findings The paper shows how performance evaluation of external auditors affects their behaviour in the workplace. From a cultural standpoint, assessing the performance of auditors whilst working in a competitive market in a developed country is regarded as a potential driver for DAB variations. Evaluating auditors’ performance in a developing country is seen as a stabiliser of DAB. This research paper demonstrates that experienced auditors have a greater tendency to behave dysfunctionally as compared to inexperienced auditors. Originality/value Prior studies have been conducted to assess auditors’ performance through using internal and external attributes (Kaplan, 1985), offshoring basic steps of audit work (Downey, 2018), and the perception of audit clients about auditors’ performance (Reheul et al., 2013). Such studies were conducted mostly on developed countries on a standalone basis. In this study, the focus has been shifted from focusing on one country to comparing two different countries. The paper examines DAB between experienced and inexperienced auditors in the UK and in Kuwait when expecting performance evaluation.