The moderating effect of internal audit on the relationship between corporate governance mechanisms and corporate performance among Saudi Arabia listed companies

Matari, Ebrahim Mohammed Al; Mgammal, Mahfoudh Hussein

doi:10.22201/fca.24488410e.2020.2316

Cited by 37 publications

(26 citation statements)

References 74 publications

(72 reference statements)

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“…For example, a study by Guidara et al ( 2021 ) aimed to assess the relationship between the effectiveness of assurance standards and sustainability by using a sample from 125 countries. Al-Matari and Mgammal ( 2019 ) reported that multi-country studies can provide basic and important insights that enable researchers to understand the subject under investigation from various cultural, social, and political aspects.…”

Section: Resultsmentioning

confidence: 99%

Sustainability assurance practices: a systematic review and future research agenda

Hazaea

Zhu

Khatib

et al. 2021

Environ Sci Pollut Res

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Although firms increasingly publish sustainability reports, assuring such reports is relatively new. This study reviews the literature of sustainability assurance to evaluate the intellectual development of the field and provide recommendations for future studies. It also demonstrates the role of assurance to enhance the credibility of sustainability reports and corporate reputation. This paper systematically reviews 94 papers obtained from the Scopus database between 1993 and August 2021. Our study shows that there is an increase in the number of studies published in recent years. We also found that some countries have received limited attention, such as the USA. The scant literature examining sustainability assurance in private institutions and non-profit organisations should be reinforced. Likewise, the sustainability research also provides limited evidence on the governance debate. The vast majority of research is not based on theoretical grounds. The need for assurance of sustainability reports not only enhances the reputation but also adds more value to the organisation’s planning, monitoring, and accountability. We highlight several new research suggestions that may enhance the understanding of sustainability assurance practices.

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Section: Resultsmentioning

confidence: 99%

Sustainability assurance practices: a systematic review and future research agenda

Hazaea

Zhu

Khatib

et al. 2021

Environ Sci Pollut Res

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“…In the case of audit committee size, all of their members must be independent and at least three members should be appointed (Securities Commission, 2017). Literature on the size of the RC indicates that there is inconsistent conclusion on the impact of RC size on company's performance; where in some cases the size has a positive effect (Tao and Hutchinson, 2013;Abubakar et al, 2018;Al Matari and Mgammal, 2020) but other studies find the opposite (Kallamu et al, 2013;Battaglia et al, 2014;Elamer and Benyazid, 2018;Kakanda et al, 2018). This raises question whether small or large RCs are effective governance mechanism.…”

Section: 23mentioning

confidence: 99%

The impact of political connection and risk committee on corporate financial performance: evidence from financial firms in Malaysia

Al‐Dhamari

Nor

Boudiab

et al. 2020

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Purpose This study aims to examine the association between the effectiveness of risk committee (RC) and firms’ performance in Malaysian context. It also explores whether political connection has an impact on the relationship. Design/methodology/approach This study, using a principle components analysis, derives a factor score for RC attributes to proxy the effectiveness of RC. It also uses both accounting and market performance to measure the company performance. Findings Using a sample of financial firms from 2004 to 2018, this study finds that both accounting and market performance are higher for firms with an effective RC. It also finds that the effectiveness of RC in monitoring and management of risks is more pronounced for politically connected firms (PCFs). In further tests, the paper finds that RC attributes (i.e. RC independence, qualification and gender) are positively and significantly associated with accounting performance, while those of RC existence and overlap are positively and significantly related to market performance. The study also finds that RC size (RC diligence) has a positive (negative) impact on financial firms accounting and market performance. The further analysis also shows that PCFs with a separate as well as larger RCs experience both higher accounting and market performance. This study’s results are robust for concerns of endogeneity. Practical implications The findings of this study resolve the ongoing debates surrounding political connection by suggesting financial firms not to have politically connected board members as doing so may deteriorate their performance. This study’s results are also useful for investors, regulators and policymakers. Originality/value To the best of the authors’ knowledge, this study, for the first time, introduces on the interaction term between the effectiveness of RCs and political connection to empirically explore how an effective RC may reduce the potential risk of political ties. As such, this study adds to the literature and sheds light on an aspect of risk (i.e. risk stems from establishing close link with the government) that is growing in importance.

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“…Companies use governance as one of the mechanisms related to agency theory to ensure that the behavior of executive managers and workers within companies is controlled, in order to achieve the interests of owners and shareholders while avoiding special interests [14]. Furthermore, the government is based on incentive rules, which motivate agents to act in the interests of the entrusting party rather than their own personal interests, as well as the existence of rules to control behavior, which achieve separation between the agent's interests and the interests of the clients, in a manner that achieves the company's basic interest, which is to make a profit, and the interests of the shareholders in this company [15]. Finally, this next part aims to deal with previous studies related to the current study as follows.…”

Section: Literature Review and Methodologymentioning

confidence: 99%

The Effect of Governance Rules Application Controls and the Accrual Basis Application Controls on Quality of Financial Reporting: Applying to Jouf University

Ibrahim

Al‐Matari

2022

Sustainability

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The issue of governance and its applications in Saudi universities is one of the most important issues that has an effective impact on achieving excellence in performance, and achieving societal development for Saudi society. The application of governance rules works to enhance the values of justice, equality, the rule of law, combating corruption, transparency and accountability to contribute to the province on public funds and achieving quality and excellence in performance. So, this study aims to study the impact of the application of governance rules and the accrual basis on the quality of financial reports in Jouf university (Saudi Universities). A total of 348 questionnaires were issued to respondents, with 242 being returned. To put the hypothesized model to the test, structural equation modeling was used. The major findings confirmed the effect of governance rules and accrual foundation of application controls on the quality of Jouf University’s financial reporting. The findings have numerous practical ramifications, including the ability to assist managers in making sound decisions when selecting whether to establish governance rules and accrual basis of application controls in their organization. This is a rare and one-of-a-kind empirical study that investigates the impact of governance rules and accrual basis of application controls on the quality of financial reporting at Saudi universities such as Jouf University. This is the first study to give empirical evidence on the relationship between governance rules, the accrual basis of application controls, and financial reporting quality in the context of universities.

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The moderating effect of internal audit on the relationship between corporate governance mechanisms and corporate performance among Saudi Arabia listed companies

Cited by 37 publications

References 74 publications

Sustainability assurance practices: a systematic review and future research agenda

Sustainability assurance practices: a systematic review and future research agenda

The impact of political connection and risk committee on corporate financial performance: evidence from financial firms in Malaysia

The Effect of Governance Rules Application Controls and the Accrual Basis Application Controls on Quality of Financial Reporting: Applying to Jouf University

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