The sustainability concept is commonly used in many domains. However, the assessment of reflective and formative measurement has been ignored largely. As a result, sustainability factor scales are specified wrongly and this might lead to reduced scale validity. The aim of the study is find out the nature of sustainability factors either reflective or formative by investigating three distinct industrial settings in Bangladesh. A quantitative research design is used and the data is analysed through Partial Least Square (PLS) analysis. PLS analysis validates the indicators and factors. Sustainability factors in context of microbusiness and supply chain found reflective in nature whereas in e-business it was formative. The study suggests that sustainability factor is a context specific phenomena and it can be treated either reflective or formative.
{"title":"REFLECTIVE OR FORMATIVE MEASUREMENT MODEL OF SUSTAINABILITY FACTOR? A THREE INDUSTRY COMPARISON","authors":"E. Khan, M. N. Dewan, M. Chowdhury","doi":"10.22495/COCV13I2P9","DOIUrl":"https://doi.org/10.22495/COCV13I2P9","url":null,"abstract":"The sustainability concept is commonly used in many domains. However, the assessment of reflective and formative measurement has been ignored largely. As a result, sustainability factor scales are specified wrongly and this might lead to reduced scale validity. The aim of the study is find out the nature of sustainability factors either reflective or formative by investigating three distinct industrial settings in Bangladesh. A quantitative research design is used and the data is analysed through Partial Least Square (PLS) analysis. PLS analysis validates the indicators and factors. Sustainability factors in context of microbusiness and supply chain found reflective in nature whereas in e-business it was formative. The study suggests that sustainability factor is a context specific phenomena and it can be treated either reflective or formative.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"26 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"113980417","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates how investments in corporate social responsibility (CSR) activities affect firm value. We categorise firms’ CSR activities as strategic or opportunistic based on consistency, and analyse the differential value relevance effect. We use the Egyptian Economic Justice Index (EEJI) as the most representative measure for firms’ CSR activities in Egypt. To measure valuation effect, we adopt an earnings response coefficient (ERC) model. Our main explanatory variables are interaction variables with unexpected earnings and two dummy variables; one indicating CSR activities, and one indicating their consistency. We document these variables as positively and negatively significant. Our findings show that investing in CSR activities consistently and strategically may increase firm’s profitability and firm value. However, firms that sporadically invest in CSR activities show a smaller relationship between unexpected earnings and stock returns than firms that consistently invest in CSR activities.
{"title":"DO CONSISTENT CSR ACTIVITIES MATTER FOR FIRM VALUE","authors":"L. Alsaid","doi":"10.22495/COCV14I1C2P6","DOIUrl":"https://doi.org/10.22495/COCV14I1C2P6","url":null,"abstract":"This paper investigates how investments in corporate social responsibility (CSR) activities affect firm value. We categorise firms’ CSR activities as strategic or opportunistic based on consistency, and analyse the differential value relevance effect. We use the Egyptian Economic Justice Index (EEJI) as the most representative measure for firms’ CSR activities in Egypt. To measure valuation effect, we adopt an earnings response coefficient (ERC) model. Our main explanatory variables are interaction variables with unexpected earnings and two dummy variables; one indicating CSR activities, and one indicating their consistency. We document these variables as positively and negatively significant. Our findings show that investing in CSR activities consistently and strategically may increase firm’s profitability and firm value. However, firms that sporadically invest in CSR activities show a smaller relationship between unexpected earnings and stock returns than firms that consistently invest in CSR activities.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129940800","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The purpose of this paper is to empirically examine the effect of intangible and financial resources on accountingand market-based performance of two bank business models i.e. conventional and Islamic banks operating in fourteen different countries worldwide for two periods referred as pre (2006-2007) and post (2009-2010) financial crisis (568 observations). The required data to calculate different constituents of intangible (i.e. intellectual capital (IC)) and financial resources is derived from Bankscope database. The results reveal that both IC and financial capital resources are necessary for banks being conventional or Islamic to create value at all times i.e. preand post-crisis period. The results further indicate a positive relationship between IC, financial capital and accounting performance of both sets of banking; however IC and financial capital are only significantly associated with the market value of Islamic banks.
{"title":"Determinants of sustainable growth: A comparative analysis of conventional and islamic banks","authors":"Tasawar Nawaz","doi":"10.22495/COCV14I1C3P1","DOIUrl":"https://doi.org/10.22495/COCV14I1C3P1","url":null,"abstract":"The purpose of this paper is to empirically examine the effect of intangible and financial resources on accountingand market-based performance of two bank business models i.e. conventional and Islamic banks operating in fourteen different countries worldwide for two periods referred as pre (2006-2007) and post (2009-2010) financial crisis (568 observations). The required data to calculate different constituents of intangible (i.e. intellectual capital (IC)) and financial resources is derived from Bankscope database. The results reveal that both IC and financial capital resources are necessary for banks being conventional or Islamic to create value at all times i.e. preand post-crisis period. The results further indicate a positive relationship between IC, financial capital and accounting performance of both sets of banking; however IC and financial capital are only significantly associated with the market value of Islamic banks.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127541106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To develop a comprehensive measurement index that captures a wide range of independent director characteristics that collectively reflect their overall resource provision capability in the context of Malaysian publicly-listed companies. A detailed content analysis of independent director-related disclosures in the annual reports of 217 family-controlled companies listed on the Malaysian stock exchange (Bursa Malaysia). Ten distinctive types of ‘resource’ that independent directors bring to their respective companies were identified. These resources (e.g. government contracts, networks, loans, expertise, etc.) are then utilized to develop a resource provision capability index. The resultant index provides a fair indication of independent directors’ contribution to enhancing/sustaining their respective companies’ performance. The developed comprehensive resource provision capability index can be used to explore as well identify the specific nature of independent director contribution to their respective firms. This study makes a contribution to the governance literature by elaborating on independent directors’ resource provision role that has been generally ignored in “Western” studies. More specifically, not only we are proposing that independent directors’ role transcends the classic, Western-inspired monitoring role, we provide evidence of other specific means by which they can contribute to their respective firms and offer a framework to capture all such capability in a concurrent manner.
{"title":"The Resource Provision Capability of Independent Directors in Family-Controlled, Publicly-Listed Companies in Malaysia","authors":"S. Sharif, K. Yeoh","doi":"10.22495/COCV13I4C2P11","DOIUrl":"https://doi.org/10.22495/COCV13I4C2P11","url":null,"abstract":"To develop a comprehensive measurement index that captures a wide range of independent director characteristics that collectively reflect their overall resource provision capability in the context of Malaysian publicly-listed companies. A detailed content analysis of independent director-related disclosures in the annual reports of 217 family-controlled companies listed on the Malaysian stock exchange (Bursa Malaysia). Ten distinctive types of ‘resource’ that independent directors bring to their respective companies were identified. These resources (e.g. government contracts, networks, loans, expertise, etc.) are then utilized to develop a resource provision capability index. The resultant index provides a fair indication of independent directors’ contribution to enhancing/sustaining their respective companies’ performance. The developed comprehensive resource provision capability index can be used to explore as well identify the specific nature of independent director contribution to their respective firms. This study makes a contribution to the governance literature by elaborating on independent directors’ resource provision role that has been generally ignored in “Western” studies. More specifically, not only we are proposing that independent directors’ role transcends the classic, Western-inspired monitoring role, we provide evidence of other specific means by which they can contribute to their respective firms and offer a framework to capture all such capability in a concurrent manner.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114823127","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Alexandros Garefalakis, A. Dimitras, Christos Floros, C. Lemonakis
Research on the quality of the narrative portion of the annual report has long been hampered by a lack of tools that permit an objective analysis of qualitative disclosure. This study is the first piece of accounting disclosure quality research which proposes a comprehensive index that uses Key Performance Indicators (KPIs) to enhance understanding of the quality of narrative information disclosure in a very important transitional period of 2002 to 2007. Our results show that after the adoption of IFRS, the level of narrative disclosure compliance with the IASB’s Management Commentary Framework (MCF) is medium, ranging from 8% to 75%, averaging 53% and this shows that there is much room for improvement with respect to the financial statements. Thus, despite the continued demand for better comparability in financial reporting practices, in our sample, a large number of firms do not seem to converge toward a single set of standards for both the narrative and financial disclosure. On the other hand, the region forced to comply with mandatory requirements (e.g., the US) will not provide a greater amount of disclosure information in their MCF reporting than the regions that are not required to comply with these disclosure guidelines (e.g., Western Europe and Northern Europe).
{"title":"HOW NARRATIVE REPORTING CHANGED THE BUSINESS WORLD: PROVIDING A NEW MEASUREMENT TOOL","authors":"Alexandros Garefalakis, A. Dimitras, Christos Floros, C. Lemonakis","doi":"10.22495/COCV13I4C2P5","DOIUrl":"https://doi.org/10.22495/COCV13I4C2P5","url":null,"abstract":"Research on the quality of the narrative portion of the annual report has long been hampered by a lack of tools that permit an objective analysis of qualitative disclosure. This study is the first piece of accounting disclosure quality research which proposes a comprehensive index that uses Key Performance Indicators (KPIs) to enhance understanding of the quality of narrative information disclosure in a very important transitional period of 2002 to 2007. Our results show that after the adoption of IFRS, the level of narrative disclosure compliance with the IASB’s Management Commentary Framework (MCF) is medium, ranging from 8% to 75%, averaging 53% and this shows that there is much room for improvement with respect to the financial statements. Thus, despite the continued demand for better comparability in financial reporting practices, in our sample, a large number of firms do not seem to converge toward a single set of standards for both the narrative and financial disclosure. On the other hand, the region forced to comply with mandatory requirements (e.g., the US) will not provide a greater amount of disclosure information in their MCF reporting than the regions that are not required to comply with these disclosure guidelines (e.g., Western Europe and Northern Europe).","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"65 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133722689","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A credit rating indicates a firm’s risk of financial default. Using 1) controlling shareholders’ ownership and 2) foreign investors’ ownership as proxies for corporate governance, we investigate whether corporate ownership structure influences a credit rating agencies’ perception of risk. Using a sample of 1,213 KRX firm-year observations, and a t+1 approach, we find that firms with higher foreign ownership have higher credit ratings compared to those with lower foreign ownership. Moreover, we find that higher percentage of shareholder ownership does not affect credit ratings for our initial sample; however, after dividing our sample into investment/non-investment grade samples, we find a positive/negative relation for investment/non-investment firms. The results suggest credit rating agencies perceive the relation between corporate ownership and default risk differently for investment/non-investment grade firms.
{"title":"Does corporate ownership affect credit risk? An investment grade vs non-investment grade firm analysis - evidence from South Korea","authors":"D. Mali, Hyoung-joo Lim","doi":"10.22495/COCV13I4P4","DOIUrl":"https://doi.org/10.22495/COCV13I4P4","url":null,"abstract":"A credit rating indicates a firm’s risk of financial default. Using 1) controlling shareholders’ ownership and 2) foreign investors’ ownership as proxies for corporate governance, we investigate whether corporate ownership structure influences a credit rating agencies’ perception of risk. Using a sample of 1,213 KRX firm-year observations, and a t+1 approach, we find that firms with higher foreign ownership have higher credit ratings compared to those with lower foreign ownership. Moreover, we find that higher percentage of shareholder ownership does not affect credit ratings for our initial sample; however, after dividing our sample into investment/non-investment grade samples, we find a positive/negative relation for investment/non-investment firms. The results suggest credit rating agencies perceive the relation between corporate ownership and default risk differently for investment/non-investment grade firms.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122434085","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mondher Bouattour, Ramzi Benkraiem, Anthony Miloudi
The purpose of this paper is to explain the underreaction of investors to information. In order to study the adjustment of prices to a fundamental value, we implement experimental markets with fluctuating fundamental values. The experimental design employed involves two treatments differentiated according to the information disclosed to the participants. The results show an underreaction to a change in the fundamental value. This underreaction is greatest when most of the subjects are facing a paper loss. This suggests that the disposition effect has a strong impact on price formation. Once most of the subjects are in a paper gain situation, the underreaction is at its lowest level when they receive good news. Thus, underreaction to information is influenced by paper gains and losses.
{"title":"Disposition effect and investor underreaction to information","authors":"Mondher Bouattour, Ramzi Benkraiem, Anthony Miloudi","doi":"10.22495/COCV13I3C2P10","DOIUrl":"https://doi.org/10.22495/COCV13I3C2P10","url":null,"abstract":"The purpose of this paper is to explain the underreaction of investors to information. In order to study the adjustment of prices to a fundamental value, we implement experimental markets with fluctuating fundamental values. The experimental design employed involves two treatments differentiated according to the information disclosed to the participants. The results show an underreaction to a change in the fundamental value. This underreaction is greatest when most of the subjects are facing a paper loss. This suggests that the disposition effect has a strong impact on price formation. Once most of the subjects are in a paper gain situation, the underreaction is at its lowest level when they receive good news. Thus, underreaction to information is influenced by paper gains and losses.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114187822","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ahmed A. El-Masry, Tarek Abdelfattah, Ehab R. Elbahar
Purpose - The current study examines the relationship between corporate governance and risk management in GCC banks. It aims to contribute to the literature by providing empirical evidence from the GCC’s banking industry of the association between risk management a nd corporate governance characteristics such as role duality, board size and percentage of nonexecutives. Design/Methodology - Using sample of 900 observations from banks in the Gulf countries, non-parametric regression, Quantile and panel data analysis have been used to test the hypotheses and the proposed model. The study uses data from financial institutions in the Gulf countries over the period from 2003 till 2012. Findings - Findings suggest that role duality and board size are negatively associated with the risk management. On other hand the percentage of non-executive members on the board was found to be insignificant. Moreover, findings indicate a positive significant relationship between governmental ownership and risk management. Research Implications - The results suggest that Islamic banks have a positive significant association with risk management measured by capital adequacy ratio. The results suggest future research to explore the relationship between risk management and other types of ownership structure such as institutional ownership. Future research can focus on risk management framework and practices in Islamic banks as such banks have its own risk.
{"title":"CORPORATE GOVERNANCE AND RISK MANAGEMENT IN GCC BANKS","authors":"Ahmed A. El-Masry, Tarek Abdelfattah, Ehab R. Elbahar","doi":"10.22495/COCV13I3P1","DOIUrl":"https://doi.org/10.22495/COCV13I3P1","url":null,"abstract":"Purpose - The current study examines the relationship between corporate governance and risk management in GCC banks. It aims to contribute to the literature by providing empirical evidence from the GCC’s banking industry of the association between risk management a nd corporate governance characteristics such as role duality, board size and percentage of nonexecutives. Design/Methodology - Using sample of 900 observations from banks in the Gulf countries, non-parametric regression, Quantile and panel data analysis have been used to test the hypotheses and the proposed model. The study uses data from financial institutions in the Gulf countries over the period from 2003 till 2012. Findings - Findings suggest that role duality and board size are negatively associated with the risk management. On other hand the percentage of non-executive members on the board was found to be insignificant. Moreover, findings indicate a positive significant relationship between governmental ownership and risk management. Research Implications - The results suggest that Islamic banks have a positive significant association with risk management measured by capital adequacy ratio. The results suggest future research to explore the relationship between risk management and other types of ownership structure such as institutional ownership. Future research can focus on risk management framework and practices in Islamic banks as such banks have its own risk.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"183 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125158083","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We explored the early Muslim scholars’ contributions to the originality of the Bookkeeping system by comparing the contributions of Western academics with those of Muslim scholars. We investigated, also, the knowledge transfer between East and West and how the early Muslims scholars’ contributions were part of the fundamentals of the Bookkeeping System. A surveying most of essays that concentrating on developments in the historical bookkeeping literature as well as reviewing historical literature about transfer knowledge between East and West. We found that Muslim scholars’ contributions to the originality of the Bookkeeping system could be divided into three stages. Firstly, it began with the foundation of Islam in 610; this sets up the basics of the Bookkeeping System. Secondly, Al-Khwarizmi sets up a comprehensive Bookkeeping System in 976. Thirdly, during the period 1332 to 1418, Al-Nuwayri and Al-Qalqashandi completed the structure of the Bookkeeping System. We found, also, that, from the 8th to the 15th centuries, Muslim scholars represented a knowledge bridge for the West suggesting that Luca Pacioli’s work was the outcomes of the Muslim scholars’ contributions. It is the first study that links the originality of Bookkeeping system with transfer knowledge between East and West. It is the first research that compare between East and West’ contributions towards Bookkeeping’ pyramid
{"title":"CONTRIBUTIONS OF EARLY MUSLIM SCHOLARS TO ORIGINALITY OF BOOKKEEPING-SYSTEM","authors":"Sherif El-halaby, K. Hussainey","doi":"10.22495/COCV13I3C3P13","DOIUrl":"https://doi.org/10.22495/COCV13I3C3P13","url":null,"abstract":"We explored the early Muslim scholars’ contributions to the originality of the Bookkeeping system by comparing the contributions of Western academics with those of Muslim scholars. We investigated, also, the knowledge transfer between East and West and how the early Muslims scholars’ contributions were part of the fundamentals of the Bookkeeping System. A surveying most of essays that concentrating on developments in the historical bookkeeping literature as well as reviewing historical literature about transfer knowledge between East and West. We found that Muslim scholars’ contributions to the originality of the Bookkeeping system could be divided into three stages. Firstly, it began with the foundation of Islam in 610; this sets up the basics of the Bookkeeping System. Secondly, Al-Khwarizmi sets up a comprehensive Bookkeeping System in 976. Thirdly, during the period 1332 to 1418, Al-Nuwayri and Al-Qalqashandi completed the structure of the Bookkeeping System. We found, also, that, from the 8th to the 15th centuries, Muslim scholars represented a knowledge bridge for the West suggesting that Luca Pacioli’s work was the outcomes of the Muslim scholars’ contributions. It is the first study that links the originality of Bookkeeping system with transfer knowledge between East and West. It is the first research that compare between East and West’ contributions towards Bookkeeping’ pyramid","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":" 9","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"113950934","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine whether the voluntary formation of a Risk Committee (RC) compromises the effectiveness of other monitoring duties carried out by the board members. We argue that adding more monitoring committees increases the board’s internal busyness, which reduces the effectiveness of monitoring by the Audit Committee (AC). Using a sample of 649 firm-year observations of financial publicly listed firms from the Gulf Cooperation Countries (GCC) over the period 2007 to 2011, we find that voluntarily adopting a risk committee impairs the effectiveness of the audit committee, which in turn reduces financial reporting quality. Our findings suggest that multiple layers of monitoring capacity viz-a-viz the existence of both an audit and risk committee may weaken the quality of monitoring provided by the audit committee.
{"title":"Ineffective Corporate Governance: Busyness of Internal Board Monitoring Committees","authors":"K. Al-Yahyaee, Ahmed Al-Hadi","doi":"10.22495/COCV13I3C2P5","DOIUrl":"https://doi.org/10.22495/COCV13I3C2P5","url":null,"abstract":"We examine whether the voluntary formation of a Risk Committee (RC) compromises the effectiveness of other monitoring duties carried out by the board members. We argue that adding more monitoring committees increases the board’s internal busyness, which reduces the effectiveness of monitoring by the Audit Committee (AC). Using a sample of 649 firm-year observations of financial publicly listed firms from the Gulf Cooperation Countries (GCC) over the period 2007 to 2011, we find that voluntarily adopting a risk committee impairs the effectiveness of the audit committee, which in turn reduces financial reporting quality. Our findings suggest that multiple layers of monitoring capacity viz-a-viz the existence of both an audit and risk committee may weaken the quality of monitoring provided by the audit committee.","PeriodicalId":438501,"journal":{"name":"Corporate Ownership and Control","volume":"75 2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-03-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134066614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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