The role of the audit committee in moderating the negative effect of non-audit services on earnings management among industrial firms listed on the Amman Stock Exchange
Dea'a Al-Deen Omar Al-Sraheen
Afro-Asian J. of Finance and Accounting, Vol. 9, No. 3 (2019) pp. 349 - 361
This paper examines the effectiveness of the audit committee in limiting the adverse effects of the provision of non-audit services (NAS) on earnings management. In addition, the current study examines the effect of surplus free cash flow and NAS on earnings management. Earnings management occurs less frequently when the audit committee is effective. In this study, audit committee effectiveness refers to the overall effectiveness of the committee that was measured using a composite measurement of effectiveness. The sample comprised 336 industrial firms listed on the Amman Stock Exchange from 2014 to 2016. The results documented that the positive relationship between surpluses free cash flow and earnings management. This study contributes to the literature by providing evidence that investors realise that NAS harms the independence of the auditor by creating an economic bond between the auditor and client that could negatively affect audit quality and hence earnings credibility. As does all research, this study suffers from limitations, including the fact that this study sheds the light only on the industrial sector in Jordan, Thus, the need exists for more research to be conducted using other sectors in Jordan and other countries as well to determine the effects of other variables on earnings management from other perspectives.
Author: Rasidah Mohd-Rashid
Impact of a regulatory change on initial performance of IPOs
Impact of a regulatory change on initial performance of IPOs
Rasidah Mohd-Rashid; Ruzita Abdul-Rahim; Norliza Che-Yahya; Ahmad Hakimi Tajuddin
Afro-Asian J. of Finance and Accounting, Vol. 9, No. 3 (2019) pp. 332 - 348
The purpose of this paper is to examine the impact of the Malaysian IPO regulatory change involving lock-up provisions on the initial performance of Malaysian IPOs. This study examines the impact of the revision in the IPO lock-up provision that took effect on February 2008 on the initial returns of 373 IPOs listed between January 2000 and December 2012, using cross-sectional multiple regressions. The findings indicate that the dummy of the lock-up period is positive and significant, validating that the dramatic drop in initial performance of Malaysian IPOs is an attribute of the shorter lock-up period regime. The new shorter lock-up period regime leaves fewer opportunities for speculation activities through IPOs. Investors may strategise to participate in firms that report higher lock-up ratio as it is likely to increase the initial returns.
The role of the audit committee in moderating the negative effect of non-audit services on earnings management among industrial firms listed on the Amman Stock Exchange
The role of the audit committee in moderating the negative effect of non-audit services on earnings management among industrial firms listed on the Amman Stock Exchange
Dea'a Al-Deen Omar Al-Sraheen
Afro-Asian J. of Finance and Accounting, Vol. 9, No. 3 (2019) pp. 349 - 361
This paper examines the effectiveness of the audit committee in limiting the adverse effects of the provision of non-audit services (NAS) on earnings management. In addition, the current study examines the effect of surplus free cash flow and NAS on earnings management. Earnings management occurs less frequently when the audit committee is effective. In this study, audit committee effectiveness refers to the overall effectiveness of the committee that was measured using a composite measurement of effectiveness. The sample comprised 336 industrial firms listed on the Amman Stock Exchange from 2014 to 2016. The results documented that the positive relationship between surpluses free cash flow and earnings management. This study contributes to the literature by providing evidence that investors realise that NAS harms the independence of the auditor by creating an economic bond between the auditor and client that could negatively affect audit quality and hence earnings credibility. As does all research, this study suffers from limitations, including the fact that this study sheds the light only on the industrial sector in Jordan, Thus, the need exists for more research to be conducted using other sectors in Jordan and other countries as well to determine the effects of other variables on earnings management from other perspectives.
Impact of a regulatory change on initial performance of IPOs
Impact of a regulatory change on initial performance of IPOs
Rasidah Mohd-Rashid; Ruzita Abdul-Rahim; Norliza Che-Yahya; Ahmad Hakimi Tajuddin
Afro-Asian J. of Finance and Accounting, Vol. 9, No. 3 (2019) pp. 332 - 348
The purpose of this paper is to examine the impact of the Malaysian IPO regulatory change involving lock-up provisions on the initial performance of Malaysian IPOs. This study examines the impact of the revision in the IPO lock-up provision that took effect on February 2008 on the initial returns of 373 IPOs listed between January 2000 and December 2012, using cross-sectional multiple regressions. The findings indicate that the dummy of the lock-up period is positive and significant, validating that the dramatic drop in initial performance of Malaysian IPOs is an attribute of the shorter lock-up period regime. The new shorter lock-up period regime leaves fewer opportunities for speculation activities through IPOs. Investors may strategise to participate in firms that report higher lock-up ratio as it is likely to increase the initial returns.