Corporate governance, excessive stock option compensation and earnings restatement: evidence from Canada

The Impact of Corporate Governance Mechanisms on Restatement of Financial Statements: An Empirical Study of the Listed Companies in Egypt

“…It means the combination of the two roles will reduce the quality of the prepared financial statements and hence, it will increase the possibility of financial restatements. This result supported prior studies (Dechow et al, 1996;Efendi et al, 2007;Rakoto, 2012;Jiang et al, 2015;Afify, 2017). The presented results of third hypothesis suggest that there is a negative and significant association between audit committee independence and financial restatements.…”

“…The results in Table (3) showed that H 1 , H 2 , H 3 , H 6 and H 7 are supported. Board independence (BODIND) is negatively linked to the likelihood of financial restatements, consistent with prior studies (Cornett et al, 2008;Marciukaityte et al, 2009;Rakoto, 2012;Soroushyar and Ahmadi, 2016;Afify, 2017). Thus, having more independency on the board of directors, more control and proper management will be emphasized, and it will also reduce the agency problems.…”

“…Also, Cornettet al, (2008) indicated that there is a negative relationship between board of director independence and financial restatement. In addition, there are some prior studies reveal that the proportion of independent directors on the board could reduce the incidence of restatement (Rakoto, 2012;Zhizhong et al, 2011). However, the study of Hasnan and Hussain, (2015)in Malaysia indicated that there is no relationship between board independence and the occurrence of financial restatement.…”

“…So, this separation between CEO and Chair responsibilities would result in better decisions related to the firm and hence, better performance of the firm resulting in lower occurrence of financial restatements. There are prior researches that indicate the presence of duality role on board may weaken corporate function (Efendi et al, 2007) and other studies that concern financial restatement found that the association between CEO duality and financial restatement is significantly positive because the quality of financial statements that prepared is at a low levels and therefore it can lead to create an agency problem (Rakoto 2012;Jiang et al, 2015).…”