Daniel A. Street and Dana R. Hermanson
This paper reviews academic literature related to the consequences that outside directors and boards may face in the wake of earnings restatements and suggests directions for…
Abstract
This paper reviews academic literature related to the consequences that outside directors and boards may face in the wake of earnings restatements and suggests directions for future research. We examine loss of board seats; recruitment of new directors; proxy recommendations and shareholder support; pre-emptive director departures; director wealth effects; director reputation, litigation, and sanction risks; international evidence; and legal proposals for reform. The overall picture that emerges from the literature is that directors’ primary risk in the wake of earnings restatements is loss of board seats, in part through adverse proxy advisor recommendations and reduced shareholder support. Directors typically face little risk of legal liability or SEC sanctions, and some directors pre-emptively leave a problem company’s board and reduce their loss of interlocked board seats. Some legal scholars have called for director liability to be increased so as to promote more vigilant board oversight. Companies often focus on increasing the independence of the board in the wake of a restatement in an effort to repair organizational reputation. While researchers have revealed a host of important findings to date, much more can be learned about the effects of restatements on outside directors and boards.
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The purpose of this paper is to establish the theory of the fraud star and the formulation of its microeconomic model, based on the behavioural sciences.
Abstract
Purpose
The purpose of this paper is to establish the theory of the fraud star and the formulation of its microeconomic model, based on the behavioural sciences.
Design/methodology/approach
The methodology is a practical exploration, first in the convergence of the economics of fraud and the behavioural sciences, based on these tools, formulating the new theory of the star of fraud and formulating its microeconomic model.
Findings
The paper concludes with a new model of the fraud star theory and its microeconomic modelling. Take into account the new theory of the fraud star of this article.
Research limitations/implications
There are no limitations in the model.
Practical implications
The practical implications are to apply the new fraud star theory and calculate your income, in different scenarios.
Social implications
The social implication is to know the income for the crime of fraud, according to the level of regulations, control and effective punishment.
Originality/value
The present work is original; there is no new theory of the fraud star, nor its microeconomic model, and it does not exist in the academic field, only in this work.
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Satya Prakash Mani, Shashank Bansal, Ratikant Bhaskar and Satish Kumar
This study aims to examine the literature from the Web of Science database published on board committees between 2002 and 2023 and outline the quantitative summary, journey of…
Abstract
Purpose
This study aims to examine the literature from the Web of Science database published on board committees between 2002 and 2023 and outline the quantitative summary, journey of board committees’ research and suggest future research directions.
Design/methodology/approach
This study examines bibliometric-content analysis combined with a systematic literature review of articles on board committees to document the summary of the field. The authors used co-citation, co-occurrence and cluster analysis under bibliometric-content analysis to present the field summary.
Findings
Board committee composition, such as their gender, independence and expertise, as well as factors affecting corporate governance, such as reporting quality, earnings management and board monitoring, all have a significant impact on board committee literature. The field is getting growing attention from authors, journals and countries. Nevertheless, there is a need for further exploration in areas like expertise, member age and tenure, the economic crisis and the nomination and remuneration committee, which have not yet received sufficient attention.
Originality/value
This paper has both theoretical and practical contributions. From a theoretical perspective, this study substantiates the prevalence of agency theory within board committee literature, reinforcing the foundational role of agency theory in shaping discussions about board committees. On practical ground, the comprehensive overview of board committee literature offers scholars a road map for navigating this field and directing their future research journey. The identification of research gaps in certain areas serves as a catalyst for scholars to explore untapped dimensions, enabling them to strengthen the essence of the committees’ performance.
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Mohamed Chakib Kolsi, Riham Muqattash and Ahmad Al-Hiyari
This paper aims to highlight the relationship between the attributes of external auditor companies and voluntary corporate social responsibility (CSR) disclosures of audited firms…
Abstract
Purpose
This paper aims to highlight the relationship between the attributes of external auditor companies and voluntary corporate social responsibility (CSR) disclosures of audited firms using a sample of Abu Dhabi Securities Exchange (ADX)-listed companies.
Design/methodology/approach
Based on a sample of 410 firm-year observations for the period 2010–2016, this study first computes an eight-item CSR disclosure index, then ran a multivariate regression analysis between CSR disclosure scores and external auditor attributes, along with client firm characteristics and additional control variables. Finally, this paper performs various additional robustness checks.
Findings
The results reveal that external auditor attributes have a significant impact on shaping the CSR disclosures of ADX-listed firms. Overall, auditor age, size, industry specialisation and portfolio diversification positively affect the level of customers’ CSR disclosures. By contrast, the magnitude of audit fees and auditor experience in the UAE has no impact on the CSR disclosures of ADX-listed firms. This study controls for client firm size, financial leverage, ownership concentration and the proportion of independent directors on companies’ board of directors. The results remain robust to additional sensitivity checks such as audit company CSR practices, extreme quartiles of CSR disclosures and the panel data estimation method.
Research limitations/implications
The research exhibits some limitations. First, this paper uses a simple index to measure CSR disclosures based on previous empirical studies, especially those related to emergent markets, which are not free from bias due to the lack of voluntary disclosure transparency for some companies listed on ADX. Second, although this study uses a seven-year observation period, the total number of observations remains limited due to ADX size. Third, other context-specific disclosures should be included such as cultural and governance variables (royal families ownership).
Practical implications
The study highlights the role of external attributes that can affect companies’ CSR disclosure policy, rather than firm-specific factors. The study also reshapes the concept of auditor quality beyond the dichotomy (“Big Four”/non-Big Four) used in the current literature.
Originality/value
The research adds to the current literature on CSR by revealing the impact of external auditor attributes on client firm CSR disclosure policy in an emerging market, the ADX.
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Hani Shirowzhan and Hossein Fakhari
This study aims to investigate the influence of professional skepticism (PS) on the quality of judgment and decision-making (QJDM) among Iranian Certified Public Accountants…
Abstract
Purpose
This study aims to investigate the influence of professional skepticism (PS) on the quality of judgment and decision-making (QJDM) among Iranian Certified Public Accountants (CPAs) while considering the moderating effects of ego depletion (ED) and overconfidence (OC).
Design/methodology/approach
Nonprobabilistic sampling was used to collect data through questionnaires and direct engagement with 950 Iranian CPA members, resulting in 300 completed responses for analysis.
Findings
The study confirms that PS significantly positively impacts QJDM among independent auditors. Therefore, a high level of trait PS could improve QJDM. In addition, a majority of auditors experience ED and suffer from OC bias due to their extensive knowledge, experience and self-efficacy. ED and OC play negative moderating roles in attenuating the effect of PS on QJDM.
Research limitations/implications
The study emphasizes that integrating PS into auditors’ codes of ethics and improving audit work systems can significantly enhance the quality of auditing practices. Furthermore, addressing existence of OC and ED among auditors will further benefit the audit process. Implementing these measures will lead to more accurate assignment and distribution of audit work among independent auditors, ultimately resulting in more reliable and objective auditing judgment and making decisions.
Originality/value
This study not only approves the vital role of PS, ED and OC in the QJDM of independent auditors but also contributes to the existing QJDM literature in auditing.