Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

Alkilani, Saleh Zaid; Hussin, Wan Nordin Wan; Salim, Basariah

doi:10.11648/j.ijafrm.20190403.11

Cited by 7 publications

(8 citation statements)

References 78 publications

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“…Foreign investors have a great influence on governance because they have greater oversight power compared to local investors (Young et al, 2008). Thus, through FOROW, administrative ruses can be reduced, and the quality of information increased, thus preventing opportunistic behavior and reducing AEM practice (Alkilani et al, 2019). Thus, foreign investors are associated with more scrutiny and monitoring, which helps reduce asymmetric information and agency costs.…”

Section: Discussionmentioning

confidence: 99%

The mediating effect of accrual earnings management on the relationship between ownership structure and firm value: Evidence from Jordan

Al-Shouha,

Khasawneh,

Nur Syahida Wan Ismail

et al. 2024

Investment Management and Financial Innovations

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Firm value is considered a primary and essential driver for investors when making investment decisions, so they are interested in the quality of the financial data in companies’ annual reports related to firm value in an attempt by the owners to improve the company’s image and raise its value. Therefore, this study examined the relationship between ownership structure and firm value through the mediating role of accrual earnings management. Panel data were extracted from the financial reports of 88 non-financial companies listed on the Amman Stock Exchange for 11 years (2009–2019). The Barron and Kenny, Sobel, and other test approaches were applied to investigate the mediation effect and mediating relationships. The outcomes identified a positive impact of managerial ownership on firm value and a positive impact of foreign ownership on firm value. Also, it showed a negative impact of managerial ownership and foreign ownership on accrual earnings management, while accrual earnings management positively impacted firm value. Regarding mediating relationships, the results identified a mediating effect of accrual earnings management on the relationship between managerial ownership and firm value and a mediating effect of accrual earnings management on the relationship between foreign ownership and firm value. However, accrual earnings management does not mediate the relationship between family ownership and firm value. This shows the importance of reducing accrual earnings management through the identities of investors (managerial and foreign), which helps increase control and improve the value of a company.

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Section: Discussionmentioning

confidence: 99%

The mediating effect of accrual earnings management on the relationship between ownership structure and firm value: Evidence from Jordan

Al-Shouha,

Khasawneh,

Nur Syahida Wan Ismail

et al. 2024

Investment Management and Financial Innovations

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“…In the particular case of the Malaysian context there are few studies that have examined the relationship between the board of directors' characteristics and the modified audit opinion (e.g., Alkilani et al, 2019a;2019b). Therefore, a significant aspect of the present study is that of contributing to the understanding of the effect of key characteristics of the board of directors on a modified audit opinion in Malaysian publicly listed companies.…”

Section: Introductionmentioning

confidence: 92%

“…In this study, with regard to the audit firm size and the operating cash flow it is expected to have a negative association with a modified audit opinion (Pucheta-Martínez & de Fuentes, 2007;Firth, et al, 2007;Goh, 2009;Farinha & Viana, 2009;Rahmat et al, 2009;Kaplan & Williams, 2013;Tsipouridou & Spathis, 2014;Moalla & Baili 2019). In respect to the audit report lag (AUDLAG), the losses (LOSS), and the statutory external audit fees (EAF) are expected to have a positive relationship, with a modified audit opinion (Francis, 1984;Chen & Church, 1992;Bell et al, 2001;Behn et al, 2001;DeFond et al, 2002;Geiger & Rama, 2003;Pucheta-Martínez & de Fuentes, 2007;Firth et al, 2007;Johl et al, 2007;Basioudis et al, 2008;Farinha & Viana, 2009;Malek & Che Ahmad, 2011;Johl et al, 2012;Kaplan & Williams, 2013;Tsipouridou & Spathis, 2014;Moalla, 2017;Sultanoglu et al2018;Alkilani et al, 2019a;Alkilani et al, 2019b;Moalla and Baili 2019). Therefore, the companies are expected to be received an unmodified audit opinion when the companies have high quality auditors, shorter audit report lag, strong financial health, appropriate net cash flow generated from operating activities, and suitable audit services fee paid by the company to its statutory external auditor on audit engagement.…”

Section: Control Variablesmentioning

confidence: 99%

The associations of board of directors’ characteristics with modified audit opinion

et al. 2020

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The aim of this study is to investigate the association between the characteristics of the board of directors and the likelihood that a company receives a modified audit opinion (as a measure of the quality of companies external financial reporting) in Malaysia. To test our hypotheses, we use the pooled cross-sectional logistic regression analysis for 136 firm-year observations listed on Bursa Malaysia over the period 2009-2011.The evidence we uncover is consistent with the hypotheses that companies with large board size and greater financial expertise of the board of directors are less possible to receive a modified audit opinion. The evidence offers by this study reinforces the listing rules of the Malaysian-Corporate-Governance Code and the requirements of the Bursa Malaysia Corporate-Governance-Guide, which consider the significance of the board of directors as an aspect of good corporate governance to its critical role in the Malaysian financial reporting process.

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“…As per the Jordan Securities Commission's draft of modified corporate governance guidelines from 2021, all 194 manufacturing and service businesses listed in the Amman Stock Exchange are required to form a specialized risk committee. This prerequisite demonstrates their dedication to encourage the use of ERMs (Alkelani et al, 2020). Based on data shown in Table 1, the manufacturing sector generated 23.93% of the GDP in 2021 and employed roughly 17.63% of the workforce.…”

Section: Introductionmentioning

confidence: 95%

The Practice of Enterprise Risk Management and Sustainable Performance in Jordan

Abdaljabar,

Zakuan,

Mat Saman

et al. 2024

IMBR

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The primary objective of any organization is to minimize risks and losses while optimizing values, revenues and returns. Therefore, risk management, which is often referred to as risk identification, likelihood of occurrence, and impact on the business, is essential. Recent corporate catastrophes have brought to light how inadequately corporations handle risks. In reaction to these challenges, organizations have shifted from separate and personalized procedures to a more comprehensive and integrated enterprise risk management (ERM) perspective in their risk management strategies. To address these new global sustainable challenges which include hunger, poverty, high unemployment, climate change, and related issues, businesses should place a strong priority on environmental preservation and social responsibility. Jordan is one of the countries dealing with several issues related to sustainability. The sustainable performance of Jordanian firms deserves further attention. Managers in Jordanian industrial businesses must keep a close eye on how the company's environmental environment is being improved to reduce air pollution, the usage of hazardous materials, and other difficulties. Therefore, companies in Jordan must adopt strategies that will allow them to face this issue to improve their social, environmental, and economic performance. Jordan's manufacturing and service industries should be at the forefront of a comprehensive approach to risk management and board monitoring, given the growing concerns regarding the environment, society, and economy. Since ERM is a relatively new concept, its implementation in Jordanian industrial and service companies is still in its early stages. Moreover, there is a lack of comprehensive research regarding the ERM in Jordan.

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Impact of Ownership Characteristics on Modified Audit Opinion in Jordan

Cited by 7 publications

References 78 publications

The mediating effect of accrual earnings management on the relationship between ownership structure and firm value: Evidence from Jordan

The mediating effect of accrual earnings management on the relationship between ownership structure and firm value: Evidence from Jordan

The associations of board of directors’ characteristics with modified audit opinion

The Practice of Enterprise Risk Management and Sustainable Performance in Jordan

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