New issue of the Corporate Ownership and Control journal

We are pleased to present the summer issue of the journal in 2018. The recent issue of the journal Corporate Ownership and Control is devoted to the questions of agency costs, value creation, CFO gender, ethics, risk-aversion, cloud accounting, internal auditing, external audit pricing and fees, executive compensation, corporate ownership, wage rigidity, board of directors, audit committees, information disclosure, international standards on auditing, private equity, firm value, earnings management, cash flows, blockchain, corporate social responsibility etc. More detailed issues are given below.

Veronika Fenyves, Zoltán Bács, Zoltán Zéman, Elvira Böcskei and Tibor Tarnóczi examine the extent to which the enterprises investigated fulfill their obligations determined by the Accounting Act to disclose all needed information in the general and informative parts of the notes to the financial statement. The analysis was performed using text mining, and the results were evaluated with non-parametric statistical methods. Based on the analysis, authors can state that the investigated companies presented proportionally less information in the general part of the notes to the financial statements as compared to the informative part. As a conclusion, it can be deduced that the investigated companies do fully not meet the legal requirements for the information provided in the notes to the financial statements. This incompleteness may cut down on the decision-making ability of the companies concerned.

Trang Doan and Mai Iskandar-Datta explicate and empirically test the implication of gender in the C-Suite for corporate governance. In particular, the authors investigate the impact of the Chief Financial Officer’s (CFO) gender on informational asymmetry. The results document that firms hiring female CFOs experience an improvement in the level of transparency, represented by a reduction in the bid-ask spread and an increase in share turnover, relative to those hiring male CFOs. The results are robust to a series of robustness tests and even after including gender diversity of the board and of the C-Suite.

Osama Abdulmunim shows that in the light of knowledge economy and the emergence of the concept of cloud accounting, it was necessary for the Jordanian public shareholding companies, which aspired to leadership, to develop their regulatory tools. Therefore, the present study has analyzed the literature on this profession to try to explain the importance of the possession of the internal auditor of the idea of leadership. This study aimed to focus on the Jordanian contributing companies and how it is hoped to create special sectors of internal auditing and cloud computing that apply the methods and strategies of the cloud accounting with focusing on the necessity of these sectors having the innovative auditing thinking.

Moon Kyung Cho presents evidence that external audit fees are negatively and significantly associated with the proportion of general internal auditors. Further, external audit hours are negatively and significantly associated with the proportion of general auditors without affecting external unit audit price. In addition, the results of the data adjusted for firm size suggest that audit fees and audit hours decrease for smaller firms as the proportion of general internal auditor increases. The result implies that both small firms and their external auditors are encouraged to utilize more general internal auditors in performing an external audit. The author finds no evidence that external audit fees are associated with internal auditor expertise or experience. This shows that external auditors are not likely to rely on internal auditors’ professional judgment in performing an external audit due to reduced auditor independence.

Xiaoying Chen and Jasmine Yur-Austin explore the role of various corporate governance mechanisms to pay for performance in American technology firms. Compared to traditional business leaders, CEOs in technology firms possess stronger power for negotiating with shareholders; such power theoretically lowers the chance of interest conflicts between management and control but may increase CEOs’ wage rigidity during business downturns, especially in firms with poor corporate governance. The aim of this study to examine during the business downturn period whether these CEOs cut their compensation effectively or exercise their negotiation power to protect their own benefit. The empirical results provide strong evidence that given poor firm performance, CEOs with weak corporate governance negotiate higher cash-based pay rather than reduce their compensations.

Nunthapin Chantachaimongkol and Shuwen Chen investigate the impact of board characteristics and auditors on the disclosure practices of listed companies in the Philippines. This study used a self-constructed research instrument, namely the ASEAN Disclosure Index, to assess the extent of corporate disclosure of 21 the Philippines’ listed companies from 2011-2015, made out of 105 observations. This study contributes to the literature by offering a new instrument for assessing the extent of corporate disclosure in Southeast Asia region and also providing a novel viewpoint into the relationships between corporate governance mechanisms on information disclosure practices in a context of developing countries like the Philippines. Definitely, the contributed empirical evidence of this study might also help regulators for enhancing the level of corporate disclosure in the Philippines as well as neighboring countries in Southeast Asia region.

Ahmed Eltweri, Nedal Sawan and Abdulaziz R. Tahar aim to determine the contemporary conduct and determinants of local auditing practice and offer an analysis of how Libyan audit stakeholders perceive the prospect of adopting harmonised auditing standards or developing such a set of standards for local use. This study has found that the Libyan accounting and auditing practice have varied according to variable concerning the personnel involved. And that the result is an overall poor quality of audit work in the country. The study contributes to the body of literature in respect of the Libyan accountancy environment by specifically exploring the perception of stakeholders towards the adoption of harmonised audit standards. By implication, it makes a contribution to the wider body of knowledge about auditing in the Arab countries, where similar cultural conventions and attitudes exist.

Renan Dejon and Andre Carvalhal explore how private equity improves the governance of target companies in Brazil. The quality of corporate governance is measured by a firm-level corporate governance index, by cross-listing shares in the U.S., and by listing on New Market, a special governance segment in Brazil. The authors estimate different panel regression and probit models to analyse the relation between PE and governance. In this study test different governance metric as dependent variables and use various firm characteristics as control variables. The results show a positive influence of PE in improving corporate governance in Brazil.

Ahmed Mushref Salim Al-Omush, Ali Mohammad Al-Attar and Walid Muhammad Masadeh aim to identify and evaluate the effect of free cash surplus flows, audit quality and the ownership on earnings management. The study shows that financial distress has a significant impact on earnings management for samples on the Jordanian listed companies. In the paper also investigates the prevalence of both accrual and base earnings management for the empirical corporate finance which claims that the better corporate governance constraints between earnings management and the relation of high free-cash -flows firms the more will the increase will be at the income management and the earnings management. The analysis provides a mixed support when using different earnings management detection models. The findings of this study could serve as a guideline to a proper and understanding of earnings management to public listed companies, regulators, and various stakeholders.

Shirley Mo-Ching Yeung aims to integrate quality management system, corporate social responsibility guidelines, United Nations Sustainable Development Goals, blockchain related documents and qualitative interview results from Hong Kong and Slovakia to design a set of social inclusive quality indicators within the context of the higher education sector. The contribution of this paper is to raise awareness of educators, industry practitioners and policy makers about the importance of social inclusion in blockchain technology. This study fills the gap through integrating system thinking, humanistic thinking and proactive thinking in the higher education context.

To browse the issue, please, visit the following link.

We hope that you will enjoy reading the journal and in future we will receive new papers, outlining the most important issues and best practices of corporate governance!