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Article
Publication date: 11 October 2021

Mahmoud Elmarzouky, Khaldoon Albitar and Khaled Hussainey

This paper aims to investigate whether Covid-19 related information is associated with a higher level of performance disclosure in the annual reports. Furthermore, it examines the…

2157

Abstract

Purpose

This paper aims to investigate whether Covid-19 related information is associated with a higher level of performance disclosure in the annual reports. Furthermore, it examines the moderating effect of corporate governance on the relationship between Covid-19 and the performance disclosure by using three governance mechanisms: board size, board independence and gender diversity.

Design/methodology/approach

The authors use quantitative content analysis. The authors applied an automated textual analysis technique to measure the level of Covid-19 information and performance disclosure for the UK Financial Times Stock Exchange all-share non-financial firms.

Findings

The authors found a significant positive relationship between the Covid-19 disclosure and the firm performance disclosure in the annual reports. The authors also find that both board independence and gender diversity moderate the relationship between the Covid-19 related information and the level of performance disclosure in the annual reports. The authors further run a robustness analysis, which confirms the main results.

Practical implications

The finding is beneficial for the regulatory setters to better understand whether firms provide generic or meaningful Covid-19 information linked to the firm’s performance. The unique findings of this paper are relevant to regulators, governments, management, shareholders and academics.

Originality/value

The authors contribute to the literature in a unique and core research area not researched previously. The paper links the Covid-19 disclosure with the firm performance from the corporate narrative perspective. The paper underlines governance factors as a moderating role in this relationship by considering three main mechanisms: board size, board independence and gender diversity.

Details

International Journal of Accounting & Information Management, vol. 29 no. 5
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 19 May 2021

Khaldoon Albitar, Habiba Al-Shaer and Mahmoud Elmarzouky

The COVID-19 pandemic has been adding pressures on companies to commit to their social and ethical responsibilities. Corporate social responsibility (CSR) reporting is the main…

1271

Abstract

Purpose

The COVID-19 pandemic has been adding pressures on companies to commit to their social and ethical responsibilities. Corporate social responsibility (CSR) reporting is the main tool through which companies communicate their social behaviour and the need for credible information is censorious during the crisis. This paper aims to measure the level of COVID-19 disclosures in CSR reports by using an automated textual analysis technique based on a sample of UK companies and investigate whether the level of disclosure is enhanced for companies that subject their CSR reports to an assurance process.

Design/methodology/approach

The study sample consists of FTSE All-share non-financial listed companies. The authors use a computer-aided textual analysis, and we use a bag of words to capture COVID-related information in the CSR section of the firm’s annual reports.

Findings

The results suggest that the existence of independent external assurance is significantly and positively associated with the provision of COVID-19 information in CSR reports. The authors also find that when assurance is provided by Big 4 accountancy firms, the disclosure of COVID-related information is enhanced. Furthermore, large companies are more likely to disclose COVID-related information in their CSR reports that are externally assured from top-tier accountancy firms, suggesting that assurance could be a burden for smaller firms. Overall, the findings suggest that assurance on CSR reports provides an “insurance-like” protection that mitigates the risks and signals the management’s ethical behaviour during the pandemic.

Practical implications

The study approach helps to assess the level of corporate engagement with COVID-19 practices and the extent of related disclosures in CSR reports based on the COVID-19 Secure Guidelines published by the UK government. This helps to emphasise how companies engage and communicate COVID-19-related information to stakeholders through CSR reports and ensure a safe working environment during this pandemic. Managers will need to assess the costs and benefits of purchasing assurance on CSR disclosures, giving the ethical signal that assurance sends to the market and protection that it covers during the crisis.

Originality/value

This paper provides a shred of unique evidence of the impact of the existence of external assurance and the type of assurer on the disclosure of COVID-related information in CSR reports. To the best of authors’ knowledge, no study has yet investigated the corporate disclosure on an unforeseen event in CSR reports and the role of CSR assurance in this respect.

Details

International Journal of Accounting & Information Management, vol. 29 no. 3
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 21 June 2022

Doaa Shohaieb, Mahmoud Elmarzouky and Khaldoon Albitar

Using textual analysis, this paper aims to measure diversity management disclosure; it also explore the relationship between corporate governance and diversity management…

855

Abstract

Purpose

Using textual analysis, this paper aims to measure diversity management disclosure; it also explore the relationship between corporate governance and diversity management disclosure.

Design/methodology/approach

The study is based on a sample of the UK FTSE all-share non-financial organisations over the period from 2013 to 2019. We used a computer-aided textual analysis, and we used a bag of words to score the sample annual reports.

Findings

The results show that the mean of the diversity management disclosure level is very low. Also, there is a positive relationship between the board size, women on board and board independence and the level of diversity management disclosure. The relationship is higher with more board members, women on board and more independent directors, aligning with previous literature.

Practical implications

The implications of this research affect stakeholders and organisations which reflects the importance of communicating diversity practices and researchers by facilitating measuring objectively firms’ diversity management practices that have not been applied previously in the field of diversity.

Originality/value

With different incidents taking place around the globe, such as the incident of George Floyd and the increased attention to diversity, organisations are under increasing social and political pressure to reflect on their diversity management practices. Previous literature has examined firms’ diversity practises from different perspectives, but to the best of the authors’ knowledge, this is the first paper to measure diversity management disclosure.

Details

International Journal of Accounting & Information Management, vol. 30 no. 4
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 18 March 2022

Khaldoon Albitar, Mahmoud Elmarzouky and Khaled Hussainey

This paper aims to examine the impact of ownership concentration on Covid-19 disclosure in the narrative sections of corporate annual reports. It also explores the mediating role…

609

Abstract

Purpose

This paper aims to examine the impact of ownership concentration on Covid-19 disclosure in the narrative sections of corporate annual reports. It also explores the mediating role of corporate leverage on the ownership concentration–Covid-19 disclosure relationship.

Design/methodology/approach

This paper uses automated textual analysis to measure Covid-19 disclosure in annual reports. It also applies different regression models to test the research hypotheses and to address the endogeneity problem. It uses univariate and multivariate analyses through correlations and ordinary least squares.

Findings

The analysis shows that ownership concentration has a negative impact on Covid-19 disclosure. It also shows that corporate leverage negatively affects Covid-19 disclosure, and it has a partial mediating effect on the ownership concentration–Covid-19 disclosure relationship.

Practical implications

The results offer important practical implications for the government, management, shareholders and policymakers. For example, corporate managers are encouraged to consider small shareholders’ interests and provide a sufficient level of Covid-19 disclosure to avoid violating their rights. Also, the government may consider forming a mechanism for balancing the ownership structure to protect small investors and weaken large shareholders’ tunnelling behaviours.

Originality/value

This paper offers two important contributions to governance and disclosure literature. First, it provides new empirical evidence on the relationship between ownership concentration and Covid-19 disclosure. Second, it provides new evidence on the mediating role of the leverage ratio on the ownership concentration–Covid-19 disclosure relationship.

Details

International Journal of Accounting & Information Management, vol. 30 no. 3
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 23 December 2024

Arshad Hasan, Usman Sufi, Mahmoud Elmarzouky and Khaled Hussainey

This study examines the influence of corporate governance indicators (CGIs) on the textual tone of nonfinancial firms in a developing economy.

87

Abstract

Purpose

This study examines the influence of corporate governance indicators (CGIs) on the textual tone of nonfinancial firms in a developing economy.

Design/methodology/approach

The data from 1,250 annual reports of listed nonfinancial firms in Pakistan are collected for 10 years. The narrative disclosure tone (NDT) is derived using the sentiment analysis of annual reports, resulting in six distinct NDT scores. The CGIs data are also extracted from the annual reports. The fixed effects model is used as the primary analytical tool, supplemented by machine learning-based linear regression. System GMM and two-stage least squares regressions are employed for robustness checks.

Findings

The findings reveal that most CGIs significantly influence all six NDTs. These results align with the existing theoretical literature, except those related to audit committee independence and gender diversity.

Research limitations/implications

The study is limited to the use of annual reports as a source of narrative disclosures. Future research might employ other sources, such as earning press releases and social media.

Practical implications

Within the unique regulatory environment of Pakistan, the study offers insights for regulators to enhance the efficacy of independent directors, discourage concentrated ownership and promote the inclusion of women in board subcommittees to establish the authenticity of textual disclosures.

Originality/value

The study adds to the limited literature on the determinants of NDT. It underscores the importance of understanding textual tone for informed investor decision-making and restoring investor confidence. Moreover, it contributes by focusing on six NDTs and exploring the interplay between CGIs and textual tone.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 14 December 2022

Mahmoud Elmarzouky, Khaled Hussainey and Tarek Abdelfattah

This paper aims to investigate the relationship between key audit matters (KAMs) and audit costs and whether board size and independence affect this relationship. Furthermore…

1114

Abstract

Purpose

This paper aims to investigate the relationship between key audit matters (KAMs) and audit costs and whether board size and independence affect this relationship. Furthermore, this paper examines the moderating effect of corporate governance on the relationship between KAMs and audit costs.

Design/methodology/approach

The authors hypothesise that disclosing more KAMs in the audit report is positively associated with audit costs because of the greater effort. The agency theory suggests that firms with good governance will mitigate the agency conflict of interest and improve financial reporting quality. Thus, good governance might moderate the relationship between reported KAMs and audit costs. The authors use a quantitative approach. The authors are using a sample of the UK FTSE all-share non-financial firms from 2014 to 2018 for the UK Financial Times Stock Exchange all-share non-financial firms.

Findings

The authors provide evidence of a significant positive relationship between KAMs and audit costs. The relationship is relatively higher when considering the independent directors' percentage as a moderating factor. These results came consistent with the agency theory literature. However, the authors found no empirical evidence to support a moderating effect of board size on the relationship between KAMs and audit cost.

Practical implications

The finding benefits the regulatory setters to better understand the consequences of the new auditing standards. This paper has theoretical and practical implications for regulators, standard setters, professional bodies, shareholders and academics.

Originality/value

This paper contributes to the literature assessing the regulatory changes related to audit reform and adds to the debate on the impact on audit costs. This paper underlines governance factors as a moderating role in this relationship between KAMs and audit costs.

Details

International Journal of Accounting & Information Management, vol. 31 no. 1
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 15 March 2022

Mahmoud Elmarzouky, Khaled Hussainey, Tarek Abdelfattah and Atm Enayet Karim

This paper aims to provide unique interdisciplinary research evidence between the risk information disclosed by auditors and the risk information disclosed by corporate managers…

1486

Abstract

Purpose

This paper aims to provide unique interdisciplinary research evidence between the risk information disclosed by auditors and the risk information disclosed by corporate managers. In particular, it investigates the association between the level of risk information disclosed by auditors (key audit matters [KAMs]) and the level of corporate narrative risk disclosure.

Design/methodology/approach

The study sample consists of the UK FTSE all-share non-financial firms across six financial years. The authors use a computer-aided textual analysis, and the authors use a bag of words to score the sample annual reports.

Findings

The results suggest that KAMs and corporate narrative risk disclosure levels vary across the industries. The authors found a significant positive association between the risk information disclosed by auditors and the risk information disclosed by corporate managers. Also, the authors found that FTSE 100 firms exhibit higher significance between the ongoing concern and the level of narrative risk disclosure.

Practical implications

The study approach helps assess the level of management risk reporting behaviour due to the new auditor risk reporting standards. This helps to emphasise how auditors and companies engage and communicate risk-related information to stakeholders. Standard setters should suggest a more detailed reporting framework to protect the shareholders. The unique findings are incredibly beneficial to the regulators, standard setters, investors, creditors, suppliers, customers, decision makers and academics.

Originality/value

This paper provides a shred of extraordinary evidence of the impact of auditor risk reporting and management risk reporting. To the best of the authors’ knowledge, no study has yet investigated the corporate narrative disclosure after the new audit standards ISA 700 and ISA 701.

Details

International Journal of Accounting & Information Management, vol. 30 no. 2
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 17 September 2024

Faraj Salman Alfawareh, Mahmoud Al-Kofahi, Edie Erman Che Johari and Ooi Chai-Aun

This paper aims to examine the connection between digital payments, ownership structure, and bank performance in Jordan, as well as investigate the moderating role of the…

208

Abstract

Purpose

This paper aims to examine the connection between digital payments, ownership structure, and bank performance in Jordan, as well as investigate the moderating role of the independent director in the said relationship.

Design/methodology/approach

The study uses data from 12 Amman stock exchange-listed commercial banks, covering the period from 2010 to 2023. This paper employs econometric analysis of panel data, including ordinary least squares (OLS) regression as the primary approach, as well as the generalised method of moments, the two-stage least square (2SLS), and the dynamic model to deal with causality and endogeneity issues in the proposed equations. This ensures that the results are valid.

Findings

The results indicate that digital payments and ownership structure have a significant positive connection with bank performance. Additionally, the independent director variable appears to play a substantial and positive moderating role in the link between ownership structure (e.g. institutional ownership) and bank performance. These results strengthen and support the claims of agency theory and the information systems success model.

Practical implications

Overall, this research helps stakeholders, bankers, managers, investors, customers, and policymakers, identify the influence of digital payment and ownership structure on bank performance in developing economies such as that of Jordan.

Originality/value

This investigation offers a unique understanding by illuminating how digital payment and ownership structure affect bank performance in a developing country such as Jordan. Additionally, it opens avenues for future research to delve into this literature domain in North African and Middle Eastern nations, with a particular focus on Jordan. This investigation is among the initial explorations in Jordan that aim to elucidate these relationships. On the theoretical level, it adds to the agency theory and IS model. It provides new insights into the dynamics of industry banking in developing nations (i.e. Jordan).

Details

International Journal of Bank Marketing, vol. 43 no. 2
Type: Research Article
ISSN: 0265-2323

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