The impact of board diversity on financial reporting quality in the GCC listed firms: the role of family and royal directors

Iqbal, Omar; Almaqtari, Faozi A.; Al‐ahdal, Waleed M.; Rahman, Abdul Aziz Abdul; Farhan, Najib H.S.

doi:10.1080/1331677x.2022.2120042

Cited by 7 publications

(3 citation statements)

References 95 publications

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“…Their different backgrounds and perspectives may also uncover potential biases or blind spots in financial reporting, promoting greater transparency and accuracy. Women directors are often perceived to be more independent and less influenced by existing power structures within the organization (Tawfik et al, 2023;Ullah et al, 2023). This independence can enable them to exercise objective judgment and act as effective monitors of financial reporting activities.…”

Section: Corporate Governance and Financial Reporting Qualitymentioning

confidence: 99%

Corporate Governance, Financial Leverage, External Audit Quality, and Financial Reporting Quality in Ghanaian Companies

Baaba Amanamah

2024

FMIR

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Good corporate governance influences the capital structure adopted by a firm. Higher financial leverage increases a firm’s risk. This might result in a window-dressing of financial statements to maintain the value of the firm. The study examined the interaction between corporate governance, financial leverage, external audit quality, and their combined influence on the quality of financial reporting inside enterprises in Ghana. The extensive inquiry was conducted using a dataset consisting of 650 observations and encompassing the timeframe from 2009 to 2021 using SPSS Process version 4.2. The findings of this study revealed a significant inverse correlation between the size of the board and the level of compliance with International Financial Reporting Standards with a correlation coefficient of -0.056. With a correlation coefficient of 0.003, the analysis revealed that there is no linear association between Board Gender Diversity (BGD) and International Financial Reporting Standards. With regards to Independent Audit Committee with a correlation coefficient of around 0.068, the findings of the study indicated a statistically significant positive relationship between the presence of an Independent Audit Committee and the level of compliance with International Financial Reporting Standards. The study showed a negative correlation of -0.024 between Financial Leverage and International Financial Reporting Standards Compliance. The observed data suggests a notable and favourable correlation between Audit Fee and International Financial Reporting Standards Compliance with a significant positive correlation of around 0.157. The model employed in the study exhibited multiple R (R) of about 0.191, indicating a modest positive association between the predictor variables and International Financial Reporting Standards Compliance. The coefficient of determination (R Square) was 0.037, indicating that 3.7% of the variation in International Financial Reporting Standards Compliance can be attributed to the predictor variables in the model used for the study. Furthermore, the study revealed an unstandardized coefficient of -0.003 and a standardized coefficient of -0.078 for Board Size, 0.023 and 0.016 for Board Gender Diversity, 0.028 and 0.109 for the Independent Audit Committee, -2.152E-05 and -0.031 for Financial Leverage and 2.809E-08 and 0.156 for Audit Fee. The study again revealed a significant indirect effect through Financial Leverage (FL) on Board Size and International Financial Reporting Standards Compliance with bootstrapped results of 0.0001. On the contrary, the study revealed that Financial Leverage does not mediate Board Gender Diversity and International Financial Reporting Standards Compliance, Independent Audit Committee, and International Financial Reporting Standards Compliance with, an indirect effect of -0.0021 and -0.0009 respectively. With mediation through Audit Fee, the study showed significant indirect effects for all three independent variables. Board Size at 0.0000, Board Gender Diversity at -0.0016, and Independent Audit Committee at -0.0027. The findings from the direct effects study indicate that Board Size and Audit Fee have a notable influence on IFRS Compliance, hence affecting the quality of financial reporting. However, no concrete evidence was found to establish a link between Board Gender Diversity and Independent Audit Committee and IFRS Compliance. For the mediation effects, it was discovered that Financial Leverage played a role as a mediator in elucidating the connection between Board Size and IFRS Compliance. Furthermore, the Audit Fee variable served as an intermediary in clarifying the associations between Board Size, Board Gender Diversity, Independent Audit Committee, and IFRS Compliance. It is recommended for companies to give utmost importance to the principles of openness, accountability, and consistent monitoring of financial leverage. Moreover, the study recommends the allocation of resources towards high-caliber external audits as it plays a pivotal role in bolstering the precision and dependability of financial reporting.

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Section: Corporate Governance and Financial Reporting Qualitymentioning

confidence: 99%

Corporate Governance, Financial Leverage, External Audit Quality, and Financial Reporting Quality in Ghanaian Companies

Baaba Amanamah

2024

FMIR

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“…The authors relied on this perspective to examine financial performance of Polish listed firms, findings that the Anglo-American assumptions might not be suitable for the realities on much of the world. Furthermore, Tawfik et al (2023), indicate that agency problem reduces if the vast majority of board directors are independent. These authors articulate that corporate governance has played an essential role in reducing the agency problem and inefficiencies.…”

Section: Theoretical Background and Literature Reviewmentioning

confidence: 99%

IFRS innovation, governance practices and firm performance: A new empirical assessment of moderating effects across GCC region

Alruwaili,

Ahmed,

Joshi

2023

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Research background: Despite the large volume of research which has been conducted, the association between corporate governance mechanisms and firm performance remains a controversial issue, particularly with the growth of accounting settings around the world. Purpose of the article: This study assesses the moderating role of International Financial Reporting Standards (IFRS) on the association between corporate governance mechanisms and firm performance in selected Gulf Cooperation Council (GCC) country-listed firms, namely Saudi Arabia, Qatar, Bahrain, and United Arab Emirates over the period 2016–2019. Methods: Importantly, we examine the direct and indirect influences of royal family members on long-term firm performance. We attempt to answer our research questions using robust estimation methods such as pooled OLS, fixed effect, random effect and first difference models. Findings & value added: The outcome reveals a significant and positive impact of firm size and board size on the firm performance in the pooled sample, while there is a significantly negative influence of financial leverage on firm performance. The impact of RFP on FP is seen to be negative and significant while the interaction term is found to be positive and statistically significant. This notably refers to the possibility that royal family directors could play an essential role in influencing the executive management team to fully react to provide extensive voluntary disclosure and comply with IFRS adoption. Our simultaneous quantile regression analysis displays the influence of corporate governance mechanisms on firm performance in various stages. While we observe that IFRS transformation has improved information comparability, policy makes in GCC countries should continue to foster conducive environment to support innovative business practices that help diversify their economies.

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“…High earnings quality implies that reported earnings are reliable, transparent, and sustainable over time, providing investors with a trustworthy representation of the company's profitability. Factors affecting earnings quality include accounting practices, revenue recognition policies, governance structure, and the consistency of earnings over time (Tawfik et al, 2023). A board with diverse backgrounds, experiences, and perspectives can provide more comprehensive oversight and decision-making, leading to a better understanding of the company's operations and potential risks.…”

Section: Introductionmentioning

confidence: 99%

Board Diversity and Earnings Quality of Listed Deposit Money Banks in Nigeria

Essien,

Akpan

2024

FUJAFR

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Investors’ confidence in the financial reporting process has been hampered because of unethical accounting practices and earnings management and this could be as a result of weak governance structures. The main objective of this study therefore was to examine the effect of board diversity on earnings quality of deposit money banks listed on the floor of the Nigerian Exchange Group from 2014-2023. The independent variable of the study was proxied by board age diversity, board experience diversity and board financial expertise, while the dependent variable was proxied by discretionary loan loss provision. The research design adopted for this study was ex post facto because secondary data were used. The sample size of this study was 10 deposit money banks purposively selected. Ordinary least square regression was used to analyze the data used and statistical software package employed was E-view version 10. The findings of the study revealed that board age diversity has a non-significant negative effect on the discretionary loan loss provisions; experience diversity and board financial expertise have significant negative effect on discretionary loan loss provisions of listed deposit money banks in Nigeria. Thus, it was concluded that board diversity has significant influence on earnings quality of listed deposit money banks in Nigeria. Therefore, it was recommended that the management of deposit money banks should prioritize recruiting board members with robust financial background and expertise to enhance both their earnings quality and financial risk management strategies.

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The impact of board diversity on financial reporting quality in the GCC listed firms: the role of family and royal directors

Cited by 7 publications

References 95 publications

Corporate Governance, Financial Leverage, External Audit Quality, and Financial Reporting Quality in Ghanaian Companies

Corporate Governance, Financial Leverage, External Audit Quality, and Financial Reporting Quality in Ghanaian Companies

IFRS innovation, governance practices and firm performance: A new empirical assessment of moderating effects across GCC region

Board Diversity and Earnings Quality of Listed Deposit Money Banks in Nigeria

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