Does shared tenure between audit committee chair and engagement partner affect audit outcomes? Evidence from the UK

Alhababsah, Salem; Ismail, Alaa Alhaj

doi:10.1016/j.bar.2021.101067

Cited by 10 publications

(4 citation statements)

References 160 publications

(253 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The AC is essential in strengthening the corporate governance system (Alleyne et al , 2006; Myers and Ziegenfuss, 2006; Chaudhry et al , 2020) and increasing financial reporting integrity (El-Sayed Ebaid, 2011; Alhababsah and Alhaj-Ismail, 2021; Nelson and Devi, 2013). If the AC is effective, not only will the management be less aggressive but also the auditor will deliver high audit quality to satisfy the AC’s demand.…”

Section: Literature Reviewmentioning

confidence: 99%

Audit committees’ oversight role in developing countries: evidence from Jordan

Alhababsah

2022

Self Cite

View full text Add to dashboard Cite

Purpose This study aims to explore the opinions of audit committee (AC) members on the extent to which they fulfil the oversight role vested in them by the Jordanian Corporate Governance Code (JCGC). Design/methodology/approach This study uses semi-structured interviews with 18 AC members. Findings The findings suggest that although ACs largely meet the JCGC’s recommendations, their substantive oversight role in practice is limited. In particular, the responses indicate that ACs suffer from a lack of real power, especially concerning the appointment (or removal) of external auditors and the evaluation of internal control. Moreover, ACs have no actual role in issues deemed important for financial reporting quality (e.g. reviewing management estimates and evaluating chief financial officer (CFOs) and internal audit executives). Originality/value This study provides rich insights into ACs’ oversight processes in a setting outside the Anglo-Saxon corporate governance model where knowledge is scant on the ACs’ real function. Hence, the study injects the literature with new qualitative-based evidence from a peculiar civil law country. Also, Jordan has spent time and energy trying to strengthen corporate governance practices to boost investors’ confidence. However, the interviewees’ responses indicate that the oversight role of the AC is still far from what the regulators anticipate. Therefore, the findings offer useful feedback for regulators to think more deeply about the current governance regulations. The feedback from this study can be extended to other developing countries with similar institutional environments, especially countries in the Middle East and North Africa.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Audit committees’ oversight role in developing countries: evidence from Jordan

Alhababsah

2022

Self Cite

View full text Add to dashboard Cite

show abstract

“…Mangena and Pike (2005) found a positive impact of financial expertise on voluntary interim reporting in the UK. Alhababsah and Alhaj-Ismail (2021) introduced co-working experience as the co-tenure relationship between chair and audit engagement partner, earnings management and meeting/beating earnings forecasts in the UK and found a positive impact on earnings quality.…”

Section: Findings Of the Literature Reviewmentioning

confidence: 99%

“…However, AC education or experience and audit firm rotation were not significantly related (Herranz et al , 2020; cross country). Moreover, co-working experience does not impact audit fees (Alhababsah and Alhaj-Ismail, 2021; UK). Based on a cross-country setting, Herranz et al (2020) reported a negative link between education-based expertise and audit fees.…”

Section: Findings Of the Literature Reviewmentioning

confidence: 99%

Which attributes of audit committees are most beneficial for European companies? Literature review and research recommendations

Velte¹

2023

JGR

View full text Add to dashboard Cite

Purpose This paper aims to review 68 archival studies on the impact of audit committees (ACs) on firms’ consequences [(non)financial reporting, performance and audit quality] in European firms. Design/methodology/approach Applying a stakeholder agency-theoretical framework, the author differentiates between three categories of AC variables: presence; composition; and resources, incentives and diligence. Findings The author finds that AC composition, (non)financial reporting and audit quality are dominant in the literature review. Other inputs or outputs are either too low in amount or yielded heterogeneous results, hindering clear tendencies. However, there are indications that financial expertise is positively related to financial reporting and audit quality, in line with agency theory and European regulatory assumptions. Research limitations/implications In the discussion of potential future research, the author emphasizes, among others, the need for the recognition of innovative and sustainable AC variables, inclusion of moderator and especially mediator variables and reaction to endogeneity concerns by advanced regression models. Practical implications As the European Commission currently discusses extended regulations on AC duties and composition, this literature review highlights the huge impact of financial expertise on financial reporting and audit quality. In view of the increased monitoring duties of sustainability reporting, both business practices and regulatory bodies should increase the sustainability expertise of ACs. Originality/value This analysis makes useful contributions to prior research by focusing on attributes of AC and their impact on firms’ outputs in the European capital market, based on a differentiation between mandatory one-tier/two-tier systems and the choice model. The findings support the promotion of European evidence-based regulations, such as the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive.

show abstract

“…Özer and Merter (2023) in Turkey's found Empirical results indicate that the financial expertise and long tenure of the audit committee members are associated with lower financial leverage. Alhababsah and Alhaj‐Ismail (2021) in Using 234 UK non‐financial companies, find that longer co‐tenure between audit committee chair and engagement partner improves accruals quality and reduces the propensity to meet or beat the earnings benchmark. Chan et al (2013) find that audit fees are negatively associated with the proportion of long board tenure directors on the independent audit committee, consistent with the notion that audit committee members' long board tenure results in lower audit effort.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The impact of longer audit committee chair tenure and board tenure on the level of sustainability disclosure: The moderating role of firm size

Alodat,

Nobanee,

Salleh

et al. 2023

Bus Strat Dev

View full text Add to dashboard Cite

The present research endeavors to examine the moderating effect of firm size on the relationship between the tenure of the audit committee chair and the board of directors with sustainability disclosure. Data from 592 non‐financial firms listed on the ASE from 2014 to 2021 were analyzed. The findings indicated that a longer tenure of a board of directors leads to increased sustainability disclosure, and firm size positively moderates this relationship. Moreover, the research outcomes indicated that the audit committee chair tenure had a positive yet non‐significant correlation with sustainability disclosure, with no moderating effect of firm size on this relationship. This study provides valuable insights for stakeholders, including investors, managers, and regulators, particularly in developing economies, by demonstrating the influence of corporate governance (CG) on sustainable development. The examination of firm size as a moderating factor offers a unique contribution to the existing literature, thus providing a deeper understanding of the indirect impact of CG on sustainability reporting.

show abstract

Does shared tenure between audit committee chair and engagement partner affect audit outcomes? Evidence from the UK

Cited by 10 publications

References 160 publications

Audit committees’ oversight role in developing countries: evidence from Jordan

Audit committees’ oversight role in developing countries: evidence from Jordan

Which attributes of audit committees are most beneficial for European companies? Literature review and research recommendations

The impact of longer audit committee chair tenure and board tenure on the level of sustainability disclosure: The moderating role of firm size

Contact Info

Product

Resources

About