Abstract this paper contributes to the audit quality literature by defining continuous measures of expected future auditfirm losses and testing their association with proxies of financial reporting quality. Qualitative characteristics are the attributes that make. The objective of this study is to examine the effect of auditors independence on audit quality. Financial reporting, quality, annual reports, nigerian firms, users. Accrual quality is a significant model that has been used to measure the quality of financial reporting. Some 25 nonfinancial firms listed on the nigeria stock exchange from 2009 to 2016. Second finding shows that there was a weak association between the characteristics of audit committee and improved financial reporting quality. The quality characteristics are the attributes that make the information provided in financial statements useful to others goitom, 2003. This study was conducted to investigate the quality of financial reports before and after adopting ifrss in ghana, and also the influence of firmspecific characteristics which include firm size, profitability, debt equity ratio, liquidity and audit firm size on the quality of financial information disclosed by firms listed on the ghana stock.
This research is using paired sample test to analyze the data. Against this backdrop, we investigated the impact of board characteristics on financial reporting quality of listed manufacturing. Doyle, weili ge, and sarah mcvay 2007 accruals quality and internal control over financial reporting. The qualitative characteristics of financial reporting. Accruals quality and internal control over financial reporting. The principle role of financial reporting is to provide investors with useful information for investment decision makings. Contribution originality this study contributes to existing literature by providing a more robust model framework that analysis the effects of firm size, firm leverage and corporate strategy on firms earnings management in nigeria. Achieving quality financial reporting guide for directors financial reporting is increasingly complex and many directors find it challenging to comply with the disclosure requirements of the standards while providing readers with information that is meaningful and understandable. Auditfirm portfolio characteristics and client financial. The relationship between audit committee characteristics. Such a framework will have several characteristics.
Achieving quality financial reporting guide for directors. Earnings management, financial leverage, firm size, corporate strategy, nigeria. It also requires an underlying infrastructure of strong corporate governance practices, effective regulatory oversight and enforcement. It is known under the accrual basis in accounting that revenues are r ecognized separately. Christiansen and lee 1994, ittner and larcker 1996, hendricks and singhal, 1997, hendricks and singhal, 1999 and easton and jarrell 1998 provide evidence to show that effective tqm implementations improve longterm profitability and stock returns. Firm structural characteristics and financial reporting quality of listed deposit money banks in nigeria article pdf available in international business research 91. Corporate governance and financial reporting quality in selected nigerian company. Pdf firm characteristics and financial reporting quality. The primary objective of financial reporting is to provide highquality financial.
Relation between reporting lags and information content and firm characteristics 11 3. Characteristics of an effective financial reporting. The study was driven by the positivist research philosophy and a deductive research. Adoption of international financial reporting standards. A competent, committed, independent, and toughminded audit committee has been described as one of the most reliable guardians of the public interest levitt, 2000. The financial reporting quality before the ifrs adoption is represented by the period 20092010, while the financial reporting quality after the ifrs is represented by the period 201220. The purpose of this study is to investigate the impact of corporate governance and financial reporting quality performance in selected nigeria company. Innovation, financial reporting quality, and audit quality. As it is defined in the conceptual framework for financial reporting of the fasb and the iasb, there are agreed upon elements of high quality financial reporting. Accounting conservatism is an important element in good quality financial reporting sample of this study consists of 3,852 firm year observations of non financial firms over the period 20012012. Understanding timeliness and quality of financial reporting in a finnish public company accounting masters thesis tiia lehtinen. However, not much research has been in done in the same area taking nordic countries into consideration. Board characteristics and financial reporting quality iiard. These authors considered the determinants of earnings quality to be firm.
Therefore, it is recommended among others that the shareholders of nigerian listed manufacturing firms should ensure all the seven firm characteristics used in this study keep on improving to decrease. Specifically, the study investigates the effect of interest rate, inflation rate, exchange rate and the gross domestic product gdp growth rate, while the firm characteristics were size, leverage and liquidity. The effect of audit committees on the performance of firms. Icc 2005 supported this view by pointing that a single worldwide framework for financial reporting requires more than a common set of accounting standards. Return to article details firm characteristics and financial reporting quality. We first document a negative relation between innovation and frq.
The audit committee independence and expertise are found to significantly associate with improved financial reporting quality. Macroeconomic factors, firm characteristics and financial. Corporate governance and firms financial performance sekhar muni amba new york institute of technology, bahrain. Firm structural characteristics and financial reporting. Hassan and bello 20 examined firm characteristics and. We observe earnings quality improvements around ifrs adoptions primarily for one type of firm, which is young, fast growing and seeking access to public equity markets. The current study argues that the firms with effective characteristics of audit committee are less likely to allow earnings management because opportunistic earnings cause uncertainty about the economic value of a firm. This relevance makes the financial reporting as the main attraction to management influence. Firm characteristics, total quality management, and. An empirical analysis on the financial reporting quality of. However the quality of an audit depends simultaneously on several audit firm characteristics such as auditor. The above stated is true also about audit committees of uk. Firm structural characteristics and financial reporting quality of. Evidence from nonfinancial firms in nigeria download download pdf firm characteristics and financial reporting quality.
The relationship between financial reporting quality and. My analysis implies that the information risk associated with the quality of financial reporting does not necessarily constitute an additional risk factor, but rather is a firmspecific uncertainty characteristic. An empirical analysis on the financial reporting quality. Financial reporting quality and investment decisions for. The quality of financial report is very crucial as published financial reports remains, for the most part, the only means by which outside shareholders and investors. The study adopted correlational research design with pooled balanced panel data of 24 firms. Board of directors, corporate governance, earning management, financial reporting quality. The purpose of this study was to examine the effect of macroeconomic variables and firm characteristics on quality of financial reporting. Recently, many researchers have examined the link between total quality management tqm and financial performance. The framework should increase the transparency of the financial aspects of a business, i. Understanding timeliness and quality of financial reporting in a finnish public company. The purpose of this paper is to explore the interrelationship between macroeconomic factors, firm characteristics and financial performance of quoted manufacturing firms in nigeria.
An extensive literature on the quality of financial reporting, characteristics of high quality earnings and the factors influencing the two has been generated in the last couple of decades. In this study, francis et al model 2005 has been used to examine the quality of financial reporting. Corporate governance and financial reporting quality in. The findings showed that the quality of annual reports and accounts of nigerian firms is only moderate. The past corporate accounting scandals have left the accounting profession in doubts of its integrity and relevance. First, some are of the view that structure characteristics of firm play. A study on the effect of macroeconomic variables and firm. This study investigates the association between investment decisions and financial reporting quality in the context of family firms versus nonfamily firms. We concluded that ifrs adoption increased the quality of financial reporting. First, some are of the view that structure characteristics of firm play a prominent role in preventing managers from manipulating accounting. As a result, boards are looking for innovative ways to. We examine the relation between innovation and financial reporting quality frq and the implications of audit quality for this relation.
In sum, firm characteristics of listed manufacturing firms in nigeria have impacted significantly on their financial reporting quality. According sloan 2001 the financial information is the first source of independent and true, communication about the performance of company managers. Because the boards structural and compositional characteristics can affect the quality of reported financial information, and empirical evidence on these effects in. Key words financial reporting, firm characteristics, internet, voluntary disclosure, determinants. Building on the classic agency theory and the behavioral agency theory, we argue that financial reporting quality may play a different role on investment decisions for family and nonfamily firms. This result is consistent with greater earnings management at higher innovation firms, likely because of the more opaque information environment that gives managers the opportunity to act. The audit committee characteristics and firm performance. Corporate governance attributes, financial reporting quality introduction financial reporting quality is a major concern for all current and potential investors. Consequences of financial reporting quality on corporate performance. Consequences of financial reporting quality on corporate.
In prior studies auditfirm size has been used as a proxy for expected future auditfirm losses and hence following theoretical arguments in deangelo journal of accounting and. Evidence from nonfinancial firms in nigeria download download pdf. In its statement of principles for financial reporting, the accounting standards board asb in the united kingdom outlines reliability, relevance, materiality, comparability, understandability and. In addition, this paper is the first empirical study to investigate the relationship between the board of directors characteristics and em in jordan. In sum, three divergent views are debated globally in respect to firm characteristics and quality of financial reporting wallace et al. First, the researcher was used a manual content analysis on the annual reports to score all. The need to ensure reliable and high quality of audit work has largely focused on auditors independence to ensure an auditor is not too familiar with his client, because if an auditor is too familiar with his client it will jeopardize their integrity and in return impair their independent opinion.
Audit quality and financial performance of companies. Firm characteristics and financial reporting quality. Using secondary data from the published reports of thirteen listed deposit money banks in nigeria for over a period of ten years between 2005 and 2014, this paper seeks to find the determinants of financial reporting quality and reports the findings of the impact of structural characteristics like age, size and level of leverage on financial. View of firm characteristics and financial reporting. Main determinants of financial reporting quality in the lebanese. Corporate financial disclosure, firm characteristics, uae firms. Hassan and bello 20 examined firm characteristics and financial reporting quality of quoted manufacturing companies in nigeria and the finding revealed that there is a significant positive relationship between firm characteristics and financial reporting quality in nigeria. Corporate governance and firms financial performance. To capture differences in the motivations for ifrs adoptions, we identify four different types of ifrs adopting firms based on a comprehensive set of firm characteristics. To assess the quality of financial reporting, various measurement methods have been used. The moderating role of malaysian corporate governance index. Corporate governance attributes and financial reporting. The firm characteristics in this study included working capital, size of firm and financial leverage.
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