Financial market consequences of early adoption of international standards on auditing: international evidence

Elmghaamez, Ibrahim Khalifa; Gerged, Ali Meftah; Ntim, Collins G.

doi:10.1108/maj-04-2019-2233

Cited by 11 publications

(9 citation statements)

References 85 publications

(106 reference statements)

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“…In this study, we measured the CD between the country (home country) where the audit client is located and the country where the Big N audit firm’s head office (host country) is located. Instead of using a local international audit firm’s culture, we use the headquarters of a Big N audit firm’s culture as we assume that cultural characteristics of local and parent audit firms are similar given the global strategies, standards, policies and governance of global audit networks to ensure consistency and continuity of audits delivered across their local offices throughout the world (Ege et al , 2019; El-Helaly et al , 2020; Elmghaamez et al , 2020). Similarly, international business studies (Mihet, 2013; Ashraf and Arshad, 2017) demonstrate that the risk-taking or organizational behaviour of foreign branches of parent companies is determined more by the home country’s national culture than by the host country.…”

Section: Data Variables and Empirical Methodologymentioning

confidence: 99%

What affects auditor choice in emerging markets? New evidence on the role of cultural distance

Acar

Şendurur

2023

MAJ

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Purpose This paper aims to examine whether the cultural distance between an international audit firm and target audit clients in emerging countries is associated with auditor choice decisions. Design/methodology/approach Based on a sample of 104,699 firm-year observations from 20 countries over 2009–2020, logit regression analysis is used to investigate the research questions. Findings The authors find strong evidence that cultural distance affects the auditor selection decision. The results suggest Big N auditors are more likely to be chosen by target audit clients in emerging countries with less cultural distance. In other words, target audit clients in emerging countries prefer to choose international audit firms whose cultural characteristics are similar. Moreover, results from two-stage least squares regression further suggest that the observed effect of cultural distance on auditor choice is unlikely to be driven by potential endogeneity. Research limitations/implications The auditor choice is limited to companies hiring Big N auditors; the authors exclude any switches to non-Big N auditors or switches between Big N auditors. The study also suffers from the concerns about methodological and conceptual criticism that most studies about national culture have to deal with. Finally, through this paper, the authors carry out the auditor selection process from the target audit clients’ side; the authors do not discuss the supply side of the process. Originality/value The authors contribute to the audit choice literature by providing evidence that the cultural distance between the countries of audit firms and target audit clients plays a role in the auditor choice decision. The study complements the prior auditor choice literature, focusing primarily on Western economies, by structuring the sample scope to emerging market economies.

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Section: Data Variables and Empirical Methodologymentioning

confidence: 99%

What affects auditor choice in emerging markets? New evidence on the role of cultural distance

Acar

Şendurur

2023

MAJ

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“…Very few studies have used the DOI theory to illustrate the relevant benefits or effects of IFRS adoption (Dayyala et al, 2020;El-Helaly et al, 2020;Elmghaamez, 2019). According to the DOI theory, adopters of innovations might experience desirable or undesirable outcomes, direct or indirect consequences, and expected or unexpected benefits due to the impact of their social factors This uncertainty of the outcomes could lead to either rejection or accepting such innovations (El-Helaly et al, 2020;Elmghaamez, Gerged, & Ntim, 2020;Oliveira & Santos, 2019;Rogers, 1995). Financial advantage is an example of a motivating/influencing factor whereby adopters can benefit from adopting innovations that might have either desirable or undesirable effects (Rogers, 2003).…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…In this regard, Elmghaamez et al (2020) argued that financial market efficiency significantly improved after the adoption of international standards on auditing, but only for listed firms that prepared their financial reports under IFRS and that were audited by ISAs. Therefore, we argue that financial market efficiency can also be influenced by IFRS adoption.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

The diffusion of innovation theory and the effects of IFRS adoption by multinational corporations on capital market performance: a cross‐countryanalysis

Elmghaamez

Attah‐Boakye

Adams

et al. 2021

Thunderbird Intl Bus Rev

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This article seeks to contribute to International Financial Reporting Standards (IFRS) literature by examining the effects of adopting IFRS on stock market performance worldwide from the diffusion of innovation theory perspective. Our study revealed several interesting findings after using combinations of unique panel data sets from 110 countries worldwide and conducting a robust empirical analysis from 1995 to 2014. First, we found a positive association between late mandatory IFRS adoption and stock market integration in Europe. Second, our findings indicate a significant negative association between early IFRS adoption and the following financial indicators: stock market trading volumes, stock market capitalization, market turnover, and market return. Third, our study reveals an insignificant association between early IFRS adoption and stock price volatility alongside stock market development. Our findings are robust and have significant practical and policy implications for regulators and policymakers of multinational corporations.

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“…For this, we believe that Jordan provides a unique setting for conducting this study (AlHaddad et al , 2021). Such characteristics allow our study to offer relevant insights into corporate governance implementations in other emerging countries, especially with the increasing integration into the world’s economies (Elmghaamez et al , 2020; Salem et al , 2020; Gerged et al , 2021b).…”

Section: Introductionmentioning

confidence: 99%

Do multiple directorships stimulate or inhibit firm value? Evidence from an emerging economy

Al‐Haddad

Gerged

Saidat

et al. 2022

IJAIM

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Purpose This study aims to examine the potential influence of multiple directorships (MDs) on the firm value of listed firms in Jordan. Design/methodology/approach Using a sample of 1,067 firm-year observations of Jordanian listed companies from 2010 to 2020, this study applies a pooled ordinary least squares regression model to examine the above-stated relationship. This technique was supported by conducting a generalized method of moments estimation to address the possible occurrence of endogeneity concerns. Findings The results show a significant negative relationship between MDs and firm performance, thereby supporting the “Busyness Hypothesis”, which suggests that directors with MDs are expected to be over-committed, too busy and less vigilant. Thus, their ability to effectively monitor the company management on behalf of the shareholders is quite limited. Originality/value To the best of the authors’ knowledge, this is the first study in Jordan, and one of the very rare studies in the Middle Eastern and North African region, to examine the relationship between MDs and firm performance. This study provides important policy and practitioner implications in the field of corporate governance by highlighting the necessity of imposing stricter limits on the number of directorships allowed for board directors. Crucially, the empirical evidence implies that limited directorships ensure that directors are able to fulfil their board responsibilities appropriately, which is significantly associated with the firm value.

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Financial market consequences of early adoption of international standards on auditing: international evidence

Cited by 11 publications

References 85 publications

What affects auditor choice in emerging markets? New evidence on the role of cultural distance

What affects auditor choice in emerging markets? New evidence on the role of cultural distance

The diffusion of innovation theory and the effects of IFRS adoption by multinational corporations on capital market performance: a cross‐countryanalysis

Do multiple directorships stimulate or inhibit firm value? Evidence from an emerging economy

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