African J. of Accounting, Auditing and Finance (5 papers in press)
Capital Structure and Return on Capital Employed of Construction Companies in Nigeria
by Sirajo Murtala, Mohammed Ibrahim, Sagir Lawal, Buhari Baba Abdullahi
Abstract: This study examined the impact of capital structure on return on
capital employed of construction firms in Nigeria. The data for the study was
obtained from the annual report and accounts of the sampled firms. The study
employed panel data analysis and pooled regression, fixed-effect and
random-effect estimation techniques for the analysis and Stata 12.0 was used.
The study concluded that capital structure has a negative impact on return on
capital employed of the sampled construction companies in Nigeria. The study
recommends that the managers of the construction companies should be careful
while using debt as a source of finance; they should try to finance their
activities with retained earnings and use debt as a last option.
Keywords: capital structure; performance; return on capital employed;
African; accounting; auditing and finance; construction companies; Nigeria.
Towards The Implementation of Corporate Governance Best Practices For Tunisian Listed Firms: An Empirical Approach Using The Artificial Neuronal Networks
by Wided Khiari, Azhaar Lajmi
Abstract: The object of this study is to propose a code allowing the assessment of some corporate governance best practices for Tunisian listed firms. This code is based on the most reputable set of codes of good governance practices worldwide and on the point of view of a sample of Tunisian experts. This code is presented as a potential tool that measures the quality of some corporate governance characteristics, such as board of directors and its committees, transparency and information policy, directors compensation and entrenchment, and ownership structure.
Using a questionnaire distributed to a sample of Tunisian experts (about 102 experts) and referring to a new approach based on the artificial neural networks, this study allowed us first, to identify the importance given by the experts to a number of criteria in assessing corporate governance of Tunisian listed firms; and second, to create consensus among experts on the values that should take the different criteria in order to achieve good governance.
Keywords: corporate governance; referential; neuronal connections; Tunisian firms; best practices.
STAKEHOLDERS PERCEPTION ABOUT STRENGTHENING THE AUDIT REPORT
by ADRIANA TIRON-TUDOR, GEORGE SILVIU CORDOS, MELINDA TIMEA FULOP
Abstract: The need for change in the accounting and audit profession is a topic discussed and accepted by both regulators and accounting professionals. As a result of the global financial crisis, users need more information regarding the auditor's work. This study aims to investigate whether users of audit reports agree with the IAASBs proposal to modify the audit report structure and to include a new section, Key Audit Matters, with the purpose of comprising more information concerning the audit mission, with the aim of improving audit communication. The authors achieve this objective by a qualitative research: exposing a theoretical background and a literature review. In order to fulfill our research objective of analyzing responses provided to the IAASB 2013 Exposure Draft, this study uses the method of content analysis. The results show that the respondents agree with the new audit report structure and the inclusion of the Key Audit Matters section in the audit report.
Keywords: audit report; IAASB; audit reporting changes; exposure draft; Key audit matters; comment letter; credibility; financial crisis.
Ownership Concentration, Foreign Ownership and Corporate Performance among the Listed Companies in East African Community (EAC): The Role of Quality Institutions.
by Bilali Basesa Jumanne
Abstract: This study examines the role of institutions to stimulate the relationship between foreign ownership and corporate performance for the panel data of 58 non-financial listed firms in EAC over 2007-2015. The panel unit root tests by Im-Pesaran-Shin and Fisher-ADF confirm that data are stationary and are also cointegrated according to Pedroni tests. The regression output using GMM estimator reveals that ownership concentration is negative and statistically significant determinant of corporate performance. Moreover, the significant positive relationship between the interaction term (foreign ownership and institution) and corporate performance indicates that quality institutions stimulate foreign ownership towards superior corporate performance and the protection of minority shareholders. Acknowledging the importance of minority shareholders for capital market development and economic output, this study recommends to the authorities to enforce ownership structure diversity and enforce quality institutions for accelerating the catching up of the potential foreign shareholders towards economic growth.
Keywords: Ownership concentration; foreign ownership; quality institutions; corporate performance; panel data; East African Community.
An Analysis of the Impact of Audit Firm Rotation on Audit Fees: A South African Perspective
by Rory Grant, Michael Harber, Tessa Minter
Abstract: The study aims to contribute to the research on audit fee determinants, analyse the impact that firm rotation has on fees, as well as to assist regulation-setters to determine the impact on audit fees of mandatory audit firm rotation in South Africa. The findings therefore have relevance for further research in audit fees determinants, auditing regulators and the international mandatory audit firm rotation debate. Through a detailed analysis of all companies listed on the Johannesburg Stock Exchange over a ten year period, the impact of audit firm rotations on audit fees charged to companies was analysed. Firstly, the effect of rotation on the audit fee in the first and second-year post-rotation was analysed. Then the size of the audit firms involved and the existence of accounting restatements after audit firm rotation was compared to the audit fee adjustment. The findings identify a strong link between client restatements and an increase in audit fees. Whether or not a restatement was issued after a rotation did have an impact on audit fees, suggesting that an increase in audit fees is likely when the newly appointed auditor requires restatement. Evidence was also found of fee discounting, which is more pronounced in smaller audit firms and which is attributed to increased levels of competition. Unexpectedly, it fails to detect solid evidence of a fee increase in the second year of a new auditor-client relationship.
Keywords: auditing; audit firm rotation; audit fees; audit fee determinants.