Corporate Governance Mechanisms and Earnings Management: Evidence of Family and Non-Family Firms in Jordan
Authors : Yousef Abu Siam, Mohammad Idris, Mohammad Jebreel, and Majed Qabajeh
Abstract : The current work explores the availability of any variance in the relationship amongst the directors’ board, the earnings management, and the effectiveness of the audit committee of the family and non-family-owned companies in Jordan. A panel dataset consisting of numerous observations on the same economic units is used. Each element includes two subscripts, the group identifier, i (63 firms listed on ASE), and inside the group index represented by t that categorizes time from 2014 to 2020. Thanks to the Hausman and Breusch-Pagan (LM) tests’ verification of the appropriateness of the random-effects model, it is used to construct the regression model in this research paper.
This study demonstrates that the relationship concerning the effectiveness of the directors’ board and earnings management is significant and negative for the entire sample and non-family companies. This association yet is insignificant and weak for family companies. Furthermore, the current work demonstrates that the audit committee’s effectiveness significantly affects the management of earnings as gleaned from the whole and family sample. However, it is found that it is insignificant for non-family companies. The current research paper studies the Jordanian firms chiefly featured with common family ownership control. As gleaned from a framework theorized based on the agency theory, the use of data from Jordan assists in comparing family and non-family firms concerning the effect of the directors’ board and the characteristics of the audit committee as a compound measure. Their combined impact on earnings management is attained by this compound measure.
Keywords : Earnings management, Jordan, Family and non-family firms, The effectiveness of the board of directors and audit committee
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The Effect of Applying Lean Accounting Tools in Enhancing the Competitive Advantage of Industrial Companies: An Empirical Study on Jordanian Industrial Companies
Authors : Ayman Al-Shanti, Majed Qabajeh, Abdulrahman Al Natour, and Yousef Abu Siam
Abstract : This study aims to demonstrate the extent to which the application of lean accounting tools in Jordanian industrial companies contribute to reducing costs and hence achieving a competitive advantage. To achieve the objectives of this study a questionnaire was designed and distributed to 120 workers in Jordanian industrial companies. The study concludes that the Jordanian industrial companies effectively utilize the resources available to them by pursuing lean accounting applications. Also, the Jordanian industrial companies provide a system for accounting information that contributes to achieving their objectives and also contribute to reducing the waste of their resources as well as allowing them to obtain the necessary resources at the lowest costs. The study recommends that the Jordanian industrial companies study the market very carefully before starting to produce new products, which helps in reducing costs and intensifying competition. Moreover, the study recommends policy-makers and related authorities to raise the morale of national products through awareness campaigns for consumers.
Keywords : lean accounting, competitive advantage, industrial firms
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Avoiding uncertainty by measuring the impact of perceived risk on the intention to use financial artificial intelligence services
Authors : Jassim Al-Gasawneh, Amjaed Alfityani, Saleh Al-Okdeh. Bisan Almasri. Hassan Mansur, Nawras Nusairat, Yousef Abu Siam.
Abstract : The moderating role of influencer endorsement and perceived monetary benefits on the relationship between perceived risk and financial artificial intelligence services was explored in this study. Data were obtained through questionnaires distributed to 200 respondents who were selected using a purposive sampling method. The respondents were customers receiving financial artificial intelligence services in Jordan. Analysis was performed using a structural equation modeling approach run by Smart-partial least squares (PLS) 3.2.9 involving data from 138 returned questionnaires. The results show a negative impact of perceived risk on financial artificial intelligence services, and a moderation effect of influencer endorsement and perceived monetary benefits on the relationship between perceived risk and financial artificial intelligence services. The findings can assist companies in their strategies of decreasing perceived risks that individuals could be encouraged to utilize business intelligence applications, for instance, financial technology services.
Keywords : Artificial Intelligence, Perceived Risk, Perceived Monetary Benefit, Influencer Endorsements
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Corporate Social Responsibility and Dividend Policy in Jordan: Advent of Firm Size as a Moderator
Authors : Yousef Abu Siam, Abu Reza Islam, Mahmoud Nassar, Mohammad Jebreel, and Hamed Al-Mahadin
Abstract : This study examined to what extent corporate social responsibility (CSR) affected dividend policy and the role firm size played as a moderator for firms in an emerging market. It used a sample of 265 industrial firms that were listed on Amman Stock Exchange during the period 2010–2016. Regression results indicate that greater is the number of CSR activities & engagements, lesser becomes the propensity to pay dividends by firms on average. The study found that firm size played an important role affecting the relationship between CSR activities and dividend policy. However, the relationship between CSR and dividend policy in this study (in an emerging market) is found to be different from those of the developed markets. This study points out that the trade-off between firms’ CSR activities and dividend policy must address the concerns of the investors, minority shareholders and policy makers for policy reform initiatives to strengthen the protection of other stakeholders’ interests.
Keywords : Corporate Social Responsibility, Dividend Policy, Firm Size, Amman Stock Exchange
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Can ownership structure and board characteristics affect firm performance?
Authors : Nisreen Al-Qatanani, and Yousef Abu Siam
Abstract : This research aimed to examine the association between board of directors’ characteristics as a composite measure, the performance of companies in Jordan and the influence of family ownership on this association. Using data on industrial companies indexed on the Amman Stock Exchange (ASE) from 2013 to 2017, a positive association between board characteristics and company performance was found, indicating that higher board effectiveness is associated with more effective monitoring of management behavior. In addition, the association between board characteristics and company performance was strong when there was an interaction with family ownership, as companies with boards with family members achieve higher performance than companies with boards run by external directors. The study findings could be useful to all regulators seeking to improve the quality of monitoring mechanism practices, especially in emerging economies
Keywords :Board ,characteristics, Family, ownership, Firm, performance
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The Status of Accounting Education and Improvement Processes in UAE
Authors : Mahmoud Daoud Nassar, Abu Reza Momammad Islam, and Yousef Ibrahim Abu Siam
Abstract : This paper identifies the obstacles to the development of accounting education in both UAE private and non-federal universities organized by the (CAA) with a view to find out the strategies and techniques that are effective to improve the accounting education and profession. The study is based on a sample of 94 university accounting teachers. Initially, 230 questionnaires were distributed to all accounting teachers, working in the Emirate private and non-federal universities regulated by CAA. Based on our results, the most significant affairs that hinder the improvement of UAE education in accounting and the accounting profession involve (i) availability no accounting books related to the needs and environment of the country, (ii) no one is qualified and competent to practice accounting training and others are insufficient recruitment and operation of accounting information systems during education process. The study results recommended several strategies and techniques to make the university accounting education effective. Among several others, they include provision of accounting curriculums in local languages, development of local standards for auditing and accounting in addition to holding examinations of professional accounting in the country.
Keywords : UAE, Accounting Education, Accounting Profession, Accounting
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Audit Committee Characteristics, Family Ownership, and Firm Performance: Evidence from Jordan
Authors : Ghaydaa Issa, and Yousef Abu Siam
Abstract : This study investigates impacts of the association between characteristics of an audit committee and firm performance. The manufacturing firms listed on Amman Stock Exchange (ASE) are selected as a study sample consisting of 37 companies for the period 2013-2017. An index containing four characteristics is established to measure the effectiveness of an audit committee, namely: independence of an audit committee, size, meetings, and financial expertise. From the findings of this study, there is a significant positive association between the audit committee characteristics and firm performance. In addition, the results document that the association between the audit committee effectiveness and firm performance becomes strong when there is an interaction with family ownership. This indicates that an increase in the effectiveness of the audit committee leads to improved firm performance, especially in the case of family controlled firms. The findings of this study are useful to all regulators and stakeholders as they provide them with a significant premise about the type of controlling shareholders and the internal mechanisms of corporate governance that will protect their interests.
Keywords :Jordan, firm performance audit committee characteristics, family ownership
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The moderating role of family control on the relationship between audit committee financial expertise and earnings management
Authors : Yousef Abu Siam, Mohammed Idris, and Saleh Al-Okdeh
Abstract : The current study offers empirical evidence on the way the family ownership moderates the association that exists between the financial experience of the audit committee and earnings management based on a sample of 44 manufacturing firms that are registered with the Amman Stock Exchange (ASE) from 2012 to 2016. From the results of the study, there is a significant negative association between the financial experience of the audit committee and earnings management. In addition, the study shows a positive interaction of the financial experience of the audit committee and the family ownership on earnings management. This indicates that an increase in the percentage of audit committee members having financial expertise, in order to restrict earnings management, is less likely to be influential in the case of family controlled firms. These results have implications for policy makers and regulatory bodies in Jordan since they highlight the need to improve the good corporate governance practices and attempt to constrain the incidence of earnings management in Jordanian firms.
Keywords : audit committee financial expertise, earnings management, family ownership, Jordan
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The Impact of External Auditor Size on the Relationship between Audit Committee Effectiveness and Earnings Management
Authors : Idris, M., Abu Siam, Y. & Ahmad, A.
Abstract : This research aims to explore new evidence on the nature of the relationship between the effectiveness of audit committee and earnings management in one of the emerging economies, Jordan. In addition, it investigates how external auditor size might moderate this relationship. For this purpose, a panel data consisting of 64 industrial firms listed on Amman Stock Exchange (ASE) is used, covering the period between 2009 and 2014. An index consisting of four characteristics is developed to measure the effectiveness of audit committee, namely audit committee independence, size, meetings and financial expertise. Results show that audit committee effectiveness has a significant and negative impact on earnings management. Moreover, a positive interaction effect of external auditor size and audit committee effectiveness on earnings management is found, which is supportive of the substitute relationship between the external auditor size and effective audit committee in reducing earnings management. Policy makers and professional accounting bodies in Jordan might benefit from these results, as they show that legislative reforms can motivate firms to adopt good governance practices to mitigate earnings management.
Keywords : audit committee effectiveness, external audit, earnings management, Jordan
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Board independence, earnings management and the moderating effect of family ownership in Jordan
Authors : Idris, M., Abu Siam, Y., & Nassar, M.
Abstract : This research examines the moderating effect of family ownership over the relationship between board independence and earnings management. Using information of industrial companies indexed on Amman Stock Exchange, this research provides evidence of negative relationship between board independence and earnings management, proposing that higher percentage of board independence is related with more effective monitoring to reduce earnings management. Moreover, the results document that the relationship between board independence and earnings management becomes weak when there is an interaction with family ownership control. These outcomes indicate that an increase in the percentage of independent directors to mitigate earnings management is less likely to be influential in the case of family controlled firms. The results of this research could be valuable to regulators in their efforts to restrict the incidence of earnings management and improve the quality of monitoring mechanisms, especially in an environment where the capital market is still evolving and the legal protection and law enforcement are weak.
Keywords :Family control, board independence, earnings management, Jordan
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Board of directors and earnings management among Jordanian listed companies: Proposing conceptual framework
Authors : Yousef Abu Siam, Nur Hidayah Binti Laili, and Khairil Faizal Bin Khairi
Abstract : Recently, high profile scandals and financial crises in the United States, Europe and East Asia, have brought corporate governance issues to the forefront in developing countries, emerging markets and transitional economies. These scandals shake the integrity of accounting information and resulted in a drop in investor confidence. This has made companies need to achieve significant progress to the corporate governance perform in order to recuperate the investors’ confidence of financial reporting quality. To achieve that, this paper proposes a conceptual framework to investigate the relationship between board characteristics (Board independence, size, CEO duality, meetings, and financial expertise) and earning management among industrial companies listed on the Amman Stock Exchange (ASE). Evidence from prior studies suggested that boards of directors are an important part of the firm’s structure and responsible for monitoring the quality of the information contained in financial reports. It is argued that effective board can reduce earnings management.
Keywords :Board of directors, earnings management, Jordan
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Audit Committee Characteristics, External Audit and Earnings Management among Jordanian Listed Companies: Proposing Conceptual Framework :
Authors : Yousef Abu Siam, Nur Hidayah Binti Laili, Khairil Faizal Bin Khairi and Mohammad Farouq Jebreel
Abstract :In fact, regulators and investors often criticize both audit committees and external audit about doing a poor job because the audited financial statements have been proved to be false and misleading due to recent high-profile earnings management cases in the world. However, the concern about the quality and integrity of accounting information is increasing over time and resulted in a drop in investor confidence following the collapse of some firms as a result of accounting manipulation by managers. This has made companies need to achieve significant progress to the corporate governance perform in order to recuperate the investors’ confidence in financial reporting quality. This paper proposes a conceptual framework to investigate the role of audit committee characteristics and external audit on earnings management using a sample of industrial companies listed on the Amman Stock Exchange (ASE). Evidence from prior studies suggested that audit committees and external auditors play a central role in ensuring the integrity of financial reporting process. The audit committee is perceived as a liaison between the external auditor and the board, an audit committee bridges the information asymmetry between them. While the external audit is perceived as an effective third party which helps mitigate information asymmetry and conflict of interests between management and investors.
Keywords : Audit, committee, characteristics, External audit, Earnings, management, Jordan
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The implementation of enterprise resource planning system within Jordanian industrial secto :
Authors : Mahmoud Nassar, Lina Warrad, and Yousef Abu Siam
Abstract : This study aims to contribute to a better understanding of the implementation of enterprise resource planning (ERP) system as management accounting innovations (MAIs) in Jordan. Using in-depth interviews this paper emphasizes the main factors that influenced the process of ERP implementation were introduced and the related obstacles associated with the implementation of ERP were also highlighted. The interviewees in the Tobacco and Cigarette Company approved that both top management support is the most crucial factor to influence ERP implementation. Moreover, the interviewees claimed that training and education were the most important factor to simplify their decision to implement ERP. During the process of implementing ERP, the company could be faced with difficulties related to the implementation in practice. Thus, barriers to change could make the change process slower, hinder it, and even prevent change. The high cost of ERP implementation, high cost of consultants, and are indicated by the majority of interviewees as the most common barriers encountered during the implementation of MAIs systems.
Keywords : Enterprise, Resource, Planning System, Management Accounting, Industrial Sector
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Board Members' Age, Gender Diversity and Firm Performance, Proposing Conceptual Framework
Authors : Mohammed Hassan Makhlouf, Nur Hidayah Binti Laili, Mohamad Yazis Ali Basah,and Yousef Abu Siam
Abstract :This paper proposes a conceptual framework to investigate the relationship between board diversity, in terms of gender diversity and members' age, and the firm performance measured by return on assets and Tobin’s Q in shareholding firms listed in Amman stock exchange. Previous studies focused on the importance of board diversity in enhancing and improving the firms' performance by supported the board of directors by younger directors with make balance with older directors. Also, previous studies pointed out that the younger directors have the courage to take bravery decisions. Regarding gender diversity, previous studies argued that the presence of women at board of directors may influence firm performance. Also, the women directors can introduce new skills, new ideas and enhancing the firms' performance.
Keywords : Board of directors, average age, gender diversity and firm performance
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The Effect of Banking Industry Development on Economic Growth: An Empirical Study in Jordan
Authors : Hamed Ahmad Almahadin , Anwar Al-Gasaymeh , Najed Alrawashdeh , and Yousef Abu Siam
Abstract : This study aims to investigate whether economic growth is elevated by banking industry development in Jordan. The study adopts time-series econometric methodologies, which comprise the bounds testing approach within the autoregressive distributed lag (ARDL) and the conditional causality analysis. Consistent with the assumptions of the adopted methodology, the study utilized annual time-series data for a relatively long period of thirty-nine years, between 1980 and 2018. The empirical results show that Jordan’s economic growth is strongly responsive in respect to any changes in banking industry development. Also, the results reveal the harmful impact of rising lending interest rate; as this rate increases, economic growth will decrease. The findings are in line with the conceptual arguments of the supply-leading hypothesis, which confirmed that banking development is considered as one of the main pillars that have stimulating effects on economic growth. The evidence of the current study may provide important implications for policymakers and bankers. Those professionals should work to maintain a stable regulatory system that enhances the banking system function in activating economic growth. Also, a considerable focus should be placed on designing a steady interest rate policy to avoid the inherently undesirable impacts of high-interest rates on the Jordanian economy
Keywords : Banking Industry, Economic Growth, ARDL, Conditional Granger Causality, Jordan
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