Corporate board and dynamics of capital structure: Evidence from <scp>UK</scp>, France and Germany

Ezeani, Ernest; Kwabi, Frank; Salem, Rami Ibrahim A.; Usman, Muhammad; Alqatamin, Rateb Mohammad Hamad; Kostov, Philip

doi:10.1002/ijfe.2593

Cited by 50 publications

(60 citation statements)

References 62 publications

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“…In the context of Germany, the supervisory board is the main internal controlling mechanism (Ezeani et al , 2021a; Ezeani et al , 2022b). The audit committee's role is crucial given the great responsibility of the supervisory board to monitor the firm's performance, the possibility of coordination failures and difficulties in detecting and reducing earnings manipulations (Albersmann and Hohenfels, 2017).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Previous studies highlighted that market-oriented economies such as the UK and the USA have a higher transparency and investor protection level (Antoniou et al , 2008; Ezeani et al , 2022a; Ezeani et al , 2022b). They also argued that countries such as Germany, Japan and France are bank-oriented economies, where firms operate in an environment of lower transparency and lower investor protection.…”

Section: Introductionmentioning

confidence: 99%

“…Therefore, we provide evidence of CS among German firms. Also, German firms follow a stakeholder corporate governance structure that deviates from Anglo-Saxon (market-based) economies (Kim et al , 2007; Ezeani et al , 2022b). Previous studies on CS ignored audit the impact of auditor’s effort on CS.…”

Section: Introductionmentioning

confidence: 99%

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The impact of audit characteristics, audit fees on classification shifting: evidence from Germany

Usman

Ezeani

Salem

et al. 2022

IJAIM

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Purpose This paper aims to examine the relationship between audit characteristics (ACs) and audit fees on classification shifting (CS) among German-listed non-financial firms. Design/methodology/approach Using a sample of 130 German-listed (Deutscher Aktienindex, Mid Cap dax and Small caps Index) firms from 2010 until 2019, this study investigated the impact of audit committee size, audit committee meetings, audit committee financial expertise and audit fees on CS. Findings This study found the evidence of CS, meaning that managers misclassify recurring expenses in the income statement into non-recurring expenses to inflate core earnings. This study also found that the audit fee ratio, audit committee financial expertise and frequency of audit meetings are negatively associated with CS among German-listed firms. However, the audit committee size does not influence CS. Research limitations/implications This study will help the board improve its internal auditing practices and provide essential information to investors to assess how ACs affect the quality of financial reporting. Originality/value This study focused on a bank-oriented economy, i.e. Germany, with lower investor protection and low transparency. This paper documents new evidence on how ACs and audit fees impact CS among German firms, as most of the previous studies on CS mainly focused on market-oriented economies such as the UK and the USA.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The impact of audit characteristics, audit fees on classification shifting: evidence from Germany

Usman

Ezeani

Salem

et al. 2022

IJAIM

Self Cite

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“…Agency theory suggests that an independent board that comprises a minimum number of non-executive directors is more likely to mitigate the conflicts of interests between shareholders and company management. Independent boards contribute both expertise and objectivity to the board’s decisions (Fama, 1980; Bhagat and Black, 2002; Ezeani et al , 2022). Several studies pointed out that independent board members offer effective monitoring to maintain their prestige (Waweru and Riro, 2013; El Diri et al , 2020).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Firstly, our study is the first to investigate the association between the extent of discretionary accrual and board characteristics among UK firms using quantile regression. We focused on the UK, given the uniqueness of the shareholderoriented CG environment (Ezeani et al, 2021(Ezeani et al, , 2022. In a shareholder approach to governance, the board's effort is geared towards mitigating managerial opportunism.…”

Section: Introductionmentioning

confidence: 99%

The impact of board characteristics on the extent of earnings management: conditional evidence from quantile regressions

Usman

Nwachukwu

Ezeani

2022

IJAIM

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Purpose This paper aims to examine the impact of board characteristics on earnings management (EM) among UK non-financial firms. Design/methodology/approach Using a sample of the UK Financial Times Stock Exchange 350 firms from 2010 till 2019, the authors investigated the relationship between board characteristics (board size, board gender diversity, board tenure, board independence, chief executive office-duality and board meetings) and EM by using the quantile regression technique. Findings This study found a non-linear association between board characteristics and discretionary accrual. The empirical evidence showed that board mechanisms reduce the extent of earnings manipulation among UK firms with higher discretionary accruals (DACC) than firms with low and medium DACC levels. Research limitations/implications The results will benefit UK firms by helping them to rethink their board composition. It will also help policymakers understand how the corporate board can help ensure the quality of financial reports. Originality/value This study used the quantile regression approach, which helps to clarify the mixed findings of prior studies that used conventional regression techniques.

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How does transparency into global sustainability initiatives influence firm value? Insights from Anglo‐American countries

2023

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Corporations use global sustainability reporting principles, certifications, guidelines, and indices to promote corporate transparency. However, the effectiveness of adopting these global transparency approaches, either separately or collectively, in increasing firm value is as yet unclear. Thus, we examine whether different global transparency approaches engender different outcomes related to firm value and whether adopting a comprehensive or integrated global transparency approach could better enhance firm value. We use a sample comprising 6978 firm-year observations of firms listed in the United States (S&P 500), Canada (S&P-TSX 221), and the United Kingdom (FTSE 350) from 2013 to 2019. A fixed-effects regression model is then used to examine the primary associations in this study. This technique was complemented by a two-step dynamic generalised method of moment (GMM) model to overcome the expected endogeneity concerns. Our findings indicate that adopting global sustainability reporting principles, certifications, and an integrated global transparency approach is positively attributable to the market value of firms. In contrast, firms' adoption of international guidelines and environmental, social, and governance (ESG) ratings cannot predict the firm value in the study context. Our evidence implies that firms' adoption of an integrated global transparency approach adds the most value to those firms when compared with adopting a standalone transparency approach across the three sampled countries. Our study provides practical implications for policymakers and corporate managers and suggests avenues for future studies to build upon our findings.

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Corporate board and dynamics of capital structure: Evidence from UK, France and Germany

Cited by 50 publications

References 62 publications

The impact of audit characteristics, audit fees on classification shifting: evidence from Germany

The impact of audit characteristics, audit fees on classification shifting: evidence from Germany

The impact of board characteristics on the extent of earnings management: conditional evidence from quantile regressions

How does transparency into global sustainability initiatives influence firm value? Insights from Anglo‐American countries

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