مقاله انگلیسی رایگان در مورد کارایی هیئت مدیره شرکت و هزینه های حسابرسی شرکت – امرالد 2018

Purpose – The quality of financial reporting for the financial institutions is vital for the public, as the negative consequences of manipulated financial statements will not only affect shareholders but also the regulators’ reputation and the society at large. The purpose of this paper is to assess the association between different corporate governance mechanisms and their impact on audit and reporting quality. The gender factor is introduced from a diverse boards’ perspective to highlight any impact of female presence on the quality of financial statements. Design/methodology/approach – The authors examine a sample of financial institutions listed on the FTSE-350 index for the years 2011 to 2015. The financial sector has its own and different regulations, and financial reporting framework and auditors are expected to behave into more scrutiny. Bloomberg database is used to obtain governance and financial data, while firms’ annual reports are used to collect audit fees and audit committee information. A panel data regression is used to test hypotheses. The authors also control for unobservable heterogeneity, reverse causality and endogeneity. Findings – The results suggest that boards with larger size and higher independence pay higher audit fees to enhance the monitoring capacity and protect the wider group of stakeholders. The results also show that women on boards are likely to reduce the risk of manipulated financial statements, as women are more inclined toward truthfulness, cautiousness and conservatism. In addition, the reported results show that audit committees with more independent members are more inclined toward obtaining higher quality audit to enhance firm’s reporting quality. Originality/value – Given the recent governments’ intervention to avoid financial institutions’ negative impact on the economy, this study is relevant and provide policymakers insights into the existing relationships between audit fees and financial institutions’ governance structure.

Introduction

The aim behind the issuance of corporate governance codes is to deliver sound corporate governance to improve monitoring over management practices, accountability and transparency for the long-term success of the business. The succession of corporate governance codes from Cadbury report to the latest UK corporate governance code recommends on the importance of board composition for effective functioning. As effective boards care for long-term firm viability, they seek to disseminate high-quality and reliable information to the wide range of stakeholders to limit the uncertainty gap and manage the issue of information asymmetry (Cohen et al., 2002; Zaman et al., 2011; Jizi and Dixon, 2017). Therefore, the role of public accounting is vital to provide assurance over the reliability of the disclosed financial statements and their freedom from material misstatements. Improper audit opinions and aggressive use of management estimates could be minimized through the presence of an active/effective board of directors and a demanding audit committee for better audit quality. Also, the presence of the mentioned governance mechanisms helps in protecting auditors’ independence as well (Zaman et al., 2011). The tasks performed by external auditors have always been a controversial issue regarding their nature, scale, and responsibility. According to the latest UK corporate governance codes, the Board of Directors is accountable to appoint external auditors, participate with external auditors in non-audit projects, re-appoint external auditors, form audit committees to collaborate with external auditors and agree on audit fees. Expert audit committee directors tend to recommend assigning industry specialist external auditor for better audit outcome. It is noted that effective audit committees and independent BoD demand better quality leading to an increase in audit fees (Abbott and Parker, 2000). Potential gaps with external auditors are reduced by incurring less agency costs associated with the presence of independent BoD (Uang et al., 2006). The presence of the agency problem, if not minimized, has a serious effect on external auditors. Several studies have previously determined factors that influence audit fees and auditors’ performance which in turn will affect the audit/accountancy profession as well the auditees (Lin and Liu, 2009). In addition to the different mechanisms of an effective corporate governance mechanisms, previous literature mentions that corporate decisions are better achieved in the existence of female directors (Thiruvadi, 2012). Women are effectual governance players and their participation in a leading position influences firms’ performance (Colaco et al., 2011). Firms with gender diverse boards are likely to have higher earnings quality and information transparency (Post and Byron, 2015).