Corporate Governance and Its Implications on Accounting and Finance

441 Pages·2020·10.363 MB·English

by  Khaled Hussainey, Hichem Khlif, Ahmad Alqatan

Corporate Governance
and Its Implications on
Accounting and Finance
Ahmad Alqatan
University of Portsmouth, UK
Khaled Hussainey
University of Portsmouth, UK
Hichem Khlif
University of Sfax, Tunisia
A volume in the Advances in Finance, Accounting,
and Economics (AFAE) Book Series
Published in the United States of America by
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Library of Congress Cataloging-in-Publication Data
Names: Alqatan, Ahmad J., 1988- editor. | Hussainey, Khaled, 1972- editor.
| Khlif, Hichem, 1982- editor.
Title: Corporate governance and its implications on accounting and finance
/ Ahmad J. Alqatan, Khaled Hussainey, Hichem Khlif.
Description: Hershey : Business Science Reference, 2020. | Includes
bibliographical references and index. | Summary: “This book explores the
implications of a good corporate governance system after global
financial crises. Corporate governance mechanisms may include board and
audit committee characteristics, ownership structure, and internal and
external auditing”-- Provided by publisher.
Identifiers: LCCN 2020005765 (print) | LCCN 2020005766 (ebook) | ISBN
9781799848523 (hardcover) | ISBN 9781799854463 (paperback) | ISBN
9781799848530 (ebook)
Subjects: LCSH: Corporate governance. | Social responsibility of business.
| Accounting,
Classification: LCC HD2741 .C77481772 2020 (print) | LCC HD2741 (ebook) |
DDC 338.6--dc23
LC record available at https://lccn.loc.gov/2020005765
LC ebook record available at https://lccn.loc.gov/2020005766

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2327-5677; eISSN: 2327-5685)
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All work contributed to this book is new, previously-unpublished material. The views expressed in this book are those of the
authors, but not necessarily of the publisher.
For electronic access to this publication, please contact: [email protected].
Advances in Finance,
Accounting, and Economics
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ISSN:2327-5677
EISSN:2327-5685
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Table of Contents
Preface.................................................................................................................................................xiv
Chapter 1
TheoriesRelatedtotheRelationshipBetweenBoardDiversity,EarningsManagement,andFirm
Performance............................................................................................................................................1
Ahmad Alqatan, University of Portsmouth, UK
Imad Chbib, University of Portsmouth, UK
Khaled Hussainey, University of Portsmouth, UK
Chapter 2
TheEffectsofCorporateGovernance(CG)onSaudiArabianCompanies’EarningsQuality............27
Zahra Al Nasser, Department of Banking and Finance, College of Business, Dar Uloom
University, Saudi Arabia
Chapter 3
TheRoleofCorporateGovernanceinMitigatingEarningsManagementPractices:AReview
Study.....................................................................................................................................................59
Nagat Mohamed Marie Younis, Faculty of Business, University of Jeddah, Saudi Arabia
Chapter 4
ITGovernanceandBusiness-ITAlignmentFrameworks,Models,andtheBestPractices.................85
Aboobucker Ilmudeen, Department of Management and Information Technology, Faculty of
Management and Commerce, South Eastern University of Sri Lanka, Sri Lanka
Chapter 5
TheRoleofITGovernanceandManagingITInvestmentonFirmPerformance..............................104
Aboobucker Ilmudeen, Department of Management and Information Technology, Faculty of
Management and Commerce, South Eastern University of Sri Lanka, Sri Lanka
Chapter 6
FinancialPerformanceAnalysisofCompaniesRegisteredonBISTCorporateGovernanceIndex:
AnEmpiricalAnalysisintheIstanbulStockExchange.....................................................................121
Haşim Bağcı, Aksaray University, Turkey


Ceyda Yerdelen Kaygın, Kafkas University, Turkey
Chapter 7
EffectofOwnershipStructureonFirmPerformanceEvidenceFromNon-FinancialListedFirms:
OwnershipStructureandPerformance...............................................................................................143
Muhammad Arslan, KIMEP University, Kazakhstan
Chapter 8
TheEffectoftheMandatoryIFRSAdoptiononAuditFeesinMalaysia..........................................171
Yosra Makni Makni Fourati, Faculté des Sciences Economiques et de Gestion, Université de
Sfax, Tunisia
Dorra Bougacha, Faculté des Sciences Economiques et de Gestion, Université de Sfax, Tunisia
Chapter 9
TheAuditCommitteeasComponentofCorporateGovernance:TheCaseoftheNetherlands........188
Sana Masmoudi Mardessi, Ecole Supérieure de Commerce, Université de Sfax, Tunisia
Yosra Makni Fourati, Faculté des Sciences Economiques et de Gestion, Université de Sfax,
Tunisia
Chapter 10
InternalAuditandFraud.....................................................................................................................216
Safa Chemingui, Higher Institue of Management of Tunis, Tunisia
Chapter 11
SuccessionPlanninginFamily-OwnedBusinessEvidenceFromanEmergingEconomy................230
Muhammad Arslan, KIMEP University, Kazakhstan
Chapter 12
TheRoleofGovernanceAttributesinCorporateSocialResponsibility(CSR)PracticesEvidence
FromJordan........................................................................................................................................255
Hamzeh Adel Al Amosh, Universiti Sultan Zainal Abidin, Malaysia
Chapter 13
BoardStructureandVoluntaryDisclosure:TunisianEvidence.........................................................280
Issal Haj-Salem, IHEC Carthage, University of Carthage, Tunisia
Chapter 14
CorporateGovernanceandCashHoldings.........................................................................................305
Ahmed Hassanein, Mansoura University, Egypt & Gulf University for Sceince and
Technology (GUST), Kuwait
Chapter 15
CorporateGovernanceinIslamicBanks:TheEfficiencyoftheShariahSupervisoryBoard............322

Sami Ben Mim, IHEC Sousse, Tunisia & University of Sousse, Tunisia
Yosra Mbarki, Institute of Advanced Business Studies of Sfax, Tunisia
Chapter 16
AnOverviewofCorporateGovernanceandInnovationinChineseITandManufacturingListed
Firms...................................................................................................................................................338
Xihui Chen, Teesside University, UK
Compilation of References...............................................................................................................358
About the Contributors....................................................................................................................421
Index...................................................................................................................................................423
Detailed Table of Contents
Preface.................................................................................................................................................xiv
Chapter 1
TheoriesRelatedtotheRelationshipBetweenBoardDiversity,EarningsManagement,andFirm
Performance............................................................................................................................................1
Ahmad Alqatan, University of Portsmouth, UK
Imad Chbib, University of Portsmouth, UK
Khaled Hussainey, University of Portsmouth, UK
Previousresearchstudieshaveusedmultipletheories,suchasresourcedependence,humancapital,social
capital,busyness,signalling,behavioural,andagencytheoriesinordertoinvestigatetheassociation
betweenboarddiversityandearningsmanagementandtheassociationbetweenboarddiversityandfirm
performance.Thischaptersurveys75researchstudiesandused37theories.Mostofthestudiesfocused
onagencyandresourcedependenttheories.Also,thisstudyusedsocialcapitaltheoryasacontribution
ofthechapter,whichwasrarelyusedandwhichexaminedtherelationshipbetweenboarddiversityand
earningsmanagementinadditiontofirmperformance.
Chapter 2
TheEffectsofCorporateGovernance(CG)onSaudiArabianCompanies’EarningsQuality............27
Zahra Al Nasser, Department of Banking and Finance, College of Business, Dar Uloom
University, Saudi Arabia
Highearningsquality(EQ)isoneofthecompany’spillarsoflong-termsuccessinbuildinginvestor
confidence.Thisstudyinvestigateswhetherornotcorporategovernance(CG)affectstheEQofnon-
financialcompanieslistedontheSaudiArabianStockExchangeknownasTadawul.Thisresearchstudy
usesdatafromasampleof482firm-yearobservationsofthesecompaniesintheperiodfrom2009to
2013.TheauthoradoptstheGeneralizedMethodofMoments(GMM)regressionmodel.Thisresearch
studycontributestothecurrentliteraturebyprovidingnewevidenceoftheeffectofCGontheEQofthe
SaudiArabiannon-financialcompanieslistedontheTadawul.Specifically,notallCGattributesaffect
eachcompany’sEQinthesameway.Thisstudy’sfindingsshowthatimportantCGattributes,which
enhancethecompany’sEQ,arethenumberofthecompany’sindependentdirectors,theseparationof
thedualrolebetweenthecompany’sCEOandchairperson,andthefinancialoraccountingexpertiseof



themembersofthecompany’sauditcommitteemembers.
Chapter 3
TheRoleofCorporateGovernanceinMitigatingEarningsManagementPractices:AReview
Study.....................................................................................................................................................59
Nagat Mohamed Marie Younis, Faculty of Business, University of Jeddah, Saudi Arabia
Theaimoftheresearchistoclarifytheroleandimportanceofcorporategovernance(CG)mechanismsin
mitigatingearningsmanagement(EM)practices.Toachievethisobjective,referencewasmadetoprevious
studiesandrelevantresearch.Ananalysiswasmentionedinaccountingabouttherelationshipbetween
agencytheoryandearningsmanagementclarifyingthetheoreticalframeworkforearningsmanagement
fromwheretheconcept,motives,techniquesofearningsmanagement,methodsofdisclosureofearnings
management,therisksresultingfromearningsmanagement,aswellasknowcorporategovernance,in
termsofconcept,goals,importance,principles,characteristics,andmechanismsofcorporategovernance,
andfinally,theroleofcorporategovernanceinlimitingearningsmanagementpractices.
Chapter 4
ITGovernanceandBusiness-ITAlignmentFrameworks,Models,andtheBestPractices.................85
Aboobucker Ilmudeen, Department of Management and Information Technology, Faculty of
Management and Commerce, South Eastern University of Sri Lanka, Sri Lanka
Informationtechnology(IT)hasbecomeavitalfunction,andalmostallorganizationsdependonIT.
TheITdependencycausestheexecutivestouseITgovernancepracticesfortheITinvestmentdecision-
makingprocess.OrganizationsspendmoreonITinvestmentseventhosethatareoverbudget,come
underpressure,behindschedule,andaregeneratingfewerpaybacksthananticipated.Hence,business
organizationsarecontinuouslyexaminedandbelievedtobeanswerablefortheirITinvestmentmorethan
ever.ThischapterfocusesonvariousITgovernanceandbusiness-ITalignmentframeworks,models,
andbestpracticestodiscussinthiscontext.
Chapter 5
TheRoleofITGovernanceandManagingITInvestmentonFirmPerformance..............................104
Aboobucker Ilmudeen, Department of Management and Information Technology, Faculty of
Management and Commerce, South Eastern University of Sri Lanka, Sri Lanka
AlthoughthemultifacetedeffectsofmanagingorgoverningIThavebeentakenintoconsiderationin
bothpracticeandtheoreticaldebate,themechanismthroughwhichthesebringfirmperformanceisyet
unclearandlimited.Drawingontheresource-basedtheoryandtheprocesstheory,thischapteraimsto
systematicallyreviewtheantecedentsofbusiness-ITalignmentonthefirmperformancecontext.The
findingsofthisstudyshowthatthebusiness-ITalignmentisderivedfromITgovernancepracticesand
managingITinvestmenttoachievefirmperformance.Thisstudyproposesthatthefirmperformance
cannotbeattainedbymerelyinvestinginIT;instead,firmsshouldfocusoneffectivemanagementofIT
practicesandstrategicallyaligntheirbusinessandITstrategies.
Chapter 6
FinancialPerformanceAnalysisofCompaniesRegisteredonBISTCorporateGovernanceIndex:
AnEmpiricalAnalysisintheIstanbulStockExchange.....................................................................121
Haşim Bağcı, Aksaray University, Turkey