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Article
Publication date: 18 September 2020

Rami Ibrahim A. Salem, Ernest Ezeani, Ali M. Gerged, Muhammad Usman and Rateb Mohammmad Alqatamin

This study aims to examine the influence of the quality of voluntary disclosure (QVD) on earnings management (EM) amongst a sample of commercial banks in the Middle East and North…

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Abstract

Purpose

This study aims to examine the influence of the quality of voluntary disclosure (QVD) on earnings management (EM) amongst a sample of commercial banks in the Middle East and North Africa (MENA) region.

Design/methodology/approach

Using a sample of 1,060 bank-year observations for the period 2006–2015, this paper developed a three-dimensional framework to measure the QVD, which considers the quantity, spread and usefulness of the information. Furthermore, this study examines the QVD-EM nexus using an ordinary least squares regression model. This technique is supplemented with conducting an instrumental variable regression model and a two-stage least squares model to overcome the potential occurrence of endogeneity problems.

Findings

The findings suggest that QVD is negatively attributed to EM in the context of MENA banks. The findings also confirm that the quality of financial reporting is enhanced by QVD dimensions that were considered in the framework, leading banks to less engagement in EM practices. In contrast, the influence of the quantity dimension (level) of the disclosed information has an insignificant impact on EM, while the spread and usefulness dimensions of VD are negatively and significantly associated with EM in the region.

Research limitations/implications

Although the results are robust to various measurements and to the possible occurrence of endogeneity problems, there are a few limitations should be acknowledged, which provides opportunities for future research. For example, the sample size is relatively small due to data accessibility issues. Likewise, the findings of the research might not be appropriate for non-financial sectors. These limitations provide a good opportunity for future studies to expand on the research by covering other developing economies and, thereby, enriching the understanding offered by this study.

Practical implications

This study offers several implications for bank managers, academics and policymakers. Firstly, it may help managers to appreciate the function and the importance of QVD in mitigating EM. Secondly, for academics, the study provides suggestive evidence on the impact of QVD on EM; however, future research may need to consider the role of morality and ethical behaviour across different environments in reducing excessive risk-taking and constraining earnings manipulation. Finally, it provides insights for policymakers and regulators to develop a framework or guidance that can help banks in providing high-QVD in the context of developing economies.

Originality/value

The study distinctively develops an innovative measurement for QVD using a new multi-dimensional model. This paper also bring new evidence on QVD complexity and its impact on EM practice from an under-researched developing context, namely, the MENA region.

Details

International Journal of Accounting & Information Management, vol. 29 no. 1
Type: Research Article
ISSN: 1834-7649

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Article
Publication date: 3 November 2020

Rateb Mohammad Alqatamin and Ernest Ezeani

This study investigates the association between the estimates of fair value and external auditor's fees.

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Abstract

Purpose

This study investigates the association between the estimates of fair value and external auditor's fees.

Design/methodology/approach

Based on a sample of 32 Jordanian financial companies listed on the Amman Stock Exchange (ASE) over the period 2005–2018. We employ random effect models to test our hypothesis.

Findings

We found a positive relationship between audit fees and the proportion of fair value assets, which implies that external auditors are more likely to spend more effort for complex estimates, thereby increasing audit fees. We examined the relationship between audit fees and three levels of fair value inputs and found a positive relationship between the level of effort spent on assessment of higher uncertainty fair value inputs and audit fees. The findings are consistent with the expectation that more audit effort is required in a highly regulated environment due to the possibility of a higher cost of litigation.

Practical implications

The findings of this study could be beneficial for a number of users of financial information, such as investors, regulators, auditors. This group of users might consider the results of this study when they are using a company's financial information, and consequently, better able to make the right decisions.

Originality/value

Although prior studies have researched fair value, no study to date among developing countries has investigated its relationship with audit fees. This study, therefore, provides new empirical evidence that the complexity and risk of fair value estimates significantly influences auditors' motivation to expend additional effort, resulting in higher audit cost.

Details

Journal of Accounting in Emerging Economies, vol. 11 no. 2
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 13 November 2017

Rateb Alqatamin, Zakaria Ali Aribi and Thankom Arun

The purpose of this paper is to investigate the effect of CEOs’ characteristics on the level of forward-looking information (FLI) disclosure. In particular, the study examines the…

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Abstract

Purpose

The purpose of this paper is to investigate the effect of CEOs’ characteristics on the level of forward-looking information (FLI) disclosure. In particular, the study examines the effect of CEO age, gender and overconfidence on the disclosure of FLI in Jordan firms.

Design/methodology/approach

The study uses a disclosure index to measure the level of FLI disclosure and employs random-effect and panel data regressions to examine the relationship between CEOs’ characteristics and the level of FLI disclosure. The sample consists of 201 non-financial companies listed on the Amman Stock Exchange for the period 2008-2013.

Findings

The results of the study show that the CEO age has a significant negative relationship with the level of FLI disclosure in annual reports of non-financial Jordanian companies, whereas gender and overconfidence have a significant positive association with FLI disclosure.

Research limitations/implications

The single country context limits the generalisability of the findings.

Practical implications

The results of the study could be beneficial for the users of financial information, such as regulators, investors, auditors and lenders. These users might consider the findings of the study when they are using a company’s financial information. Accordingly, they may seek to extend the investigations and verify such reporting practices and consequently make better decisions. In addition, the findings provide empirical evidence that helps managers in assessing their financial transparency and accountability.

Originality/value

The relationship between CEO’s characteristics and the level of FLI disclosure is still ambiguous. This study contributes to the FLI disclosure literature by identifying the role of CEO characteristics on the level of FLI disclosure. Thus, it offers evidence that the level of FLI disclosure is driven by specific CEO characteristics.

Details

Journal of Applied Accounting Research, vol. 18 no. 4
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 7 August 2017

Rateb Mohammmad Alqatamin, Zakaria Ali Aribi and Thankom Arun

This study aims to examine the effect of CEO’s personal characteristics on earnings management (EM) practices.

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Abstract

Purpose

This study aims to examine the effect of CEO’s personal characteristics on earnings management (EM) practices.

Design/methodology/approach

The authors use panel data for 201 non-financial companies listed on the Amman Stock Exchange (ASE) for the period 2008-2013. The authors use random effect models to test the hypothesis of this study and extent the analysis to family versus non-family.

Findings

The study finds a positive relation between CEO’s overconfidence and EM practices in Jordan. Moreover, the findings reveal that managers in family companies are more likely to engage in EM practices than non-family companies. The findings shed more light on the intricate relationship between CEO’s characteristics, the decision-making process and financial reporting.

Practical implications

Results of this study could be beneficial for a number of users of financial information such as investors, auditors, regulators, lenders, as well other players in the capital market to make right decisions.

Originality/value

A literature review finds that much less studies have investigated the relationship between EM practices and personal CEO characteristics (gender and overconfidence) in developing countries such as Jordan. Furthermore, no study yet has examined the influence of CEO age on EM practices. The authors extend previous literature by providing empirical evidence about effect of some personal CEO’s characteristics on EM practices.

Details

International Journal of Accounting & Information Management, vol. 25 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 8 May 2018

Zakaria Ali Aribi, Rateb Mohammad Alqatamin and Thankom Arun

The purpose of this paper is to provide empirical evidence of the relationship between female representation on the board and forward-looking information disclosures (FLIDs).

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Abstract

Purpose

The purpose of this paper is to provide empirical evidence of the relationship between female representation on the board and forward-looking information disclosures (FLIDs).

Design/methodology/approach

The study uses the content analysis to analyze the narrative evidence from the annual financial reports of non-financial Jordanian companies listed on the Amman Stock Exchange. The final sample consists of 1,206 firm-year observations during the period 2008-2013.

Findings

The study provides evidence that gender diversity on boards positively affects the level of FLIDs. Further to this, the study reveals that family firms disclose more information than non-family firms.

Practical implications

Results of this study could be beneficial for a number of users of financial information such as, regulators, investors, auditors and lenders. The users might consider the findings of this study when they are using the company’s financial information. Consequently, users of this information could be better assisted to make right decisions.

Originality/value

This study contributes to the literature by identifying the role of gender on the level of FLID, particularly on family and non-family, a relatively little researched area.

Details

Journal of Accounting in Emerging Economies, vol. 8 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

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