International Journal of Accounting, Auditing and Performance Evaluation
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International Journal of Accounting, Auditing and Performance Evaluation (5 papers in press)
The relationship between evidence characteristics and audit efficiency and effectiveness: evidence from Middle Eastern countries by Osama A. E. Mah'd, Ghassan H. Mardini, Manal M. Ali Abstract: This paper investigates the relationship between three evidence characteristics (namely, sufficiency, reliability, relevance) and audit quality. We employ a multimethod approach that is broken down into two tools; questionnaires and interviews with 103 external auditors working in Jordan, Saudi Arabia and the United Arab Emirates. The current study adopted the decision usefulness theory as a theoretical framework. The main finding of the study revealed that there is a significant relationship between sufficiency and audit quality (both the efficiency and effectiveness of the audit). Interestingly, the results show that reliability and relevance are associated with audit effectiveness, but did not show significant association with audit efficiency. The contribution of the current study that it increases awareness of the evidence characteristics and their impact on the audit quality. This kind of awareness aids the decision makers to have a better vision that enables them to take sufficient, relevant and reliable decisions. Keywords: audit evidence; efficiency; effectiveness; sufficiency; reliability; and relevance; Middle East.
Performance and entrepreneurial orientation in SMEs: the case
of Abu Dhabi by Mohamed Sherif, Laura Galloway, Hajer Zarrouk Abstract: The paper explores Entrepreneurial Orientation (EO) in SMEs in the Middle Eastern state of Abu Dhabi in the United Arab Emirates. We hypothesise that emerging market context and unique UAE business structures will impact the expression and effects of the five dimensions of EO. Using OLS and GMM techniques, our study shows that innovation, risk taking, proactiveness and competitive aggressiveness do not correlate positively with performance, but autonomy does. By studying EO in a unique region and amongst SMEs we contribute to the implementation and development of theory in alternative business contexts. We suggest the EO dimensions co-depend, with autonomy a capstone dimension in SMEs upon which the others rely. At a local level, we suggest policy might take steps to encourage autonomy by reducing ownership restrictions, and improve the institutional environment to facilitate risk-taking and, in turn, the other EO dimensions. Keywords: performance evaluation; entrepreneurial orientation; SMEs; emerging economy; Abu Dhabi; business structures.
The association between accruals and stock return following FRS3 by Javad Izadi, Alireza Nazarian, Jinnfeng Ye, Ali Shahzad Abstract: The purpose of this project is to investigate the correlation between accruals and stock return and further the quality of accounting accruals shown in the financial statements for shareholders to predict their future returns. Specifically, this paper focuses on the accrual anomaly phenomenon in the United Kingdom on the adoption of FRS No.3. Our results show that stock returns can be predicted by accruals attributable to accounting misrepresentations. Generally, our findings support the information disclosure regarding to FRS No.3. Also, the results are in the line with increased accounting disclosure to help to protect investors from inefficiencies and encourage them to be aware of accurate stock prices in the market. Keywords: accruals; stock returns; FRS No.3.
Capital structure and earnings management: evidence from recent French corporate governance context by Sana Triki Damak, Salah Ben Hamad Abstract: The aim of this research is to show how the capital structure policy is affected by earnings management and corporate governance characteristics. This study is performed on a sample of SBF 120 listed companies over the period 2009-2014. Raman and Shahrur's (2008) model is used for calculation of discretionary accruals. Using two fixed-effects models, we confirm the significant relationship between earnings management and capital structure. Also, we find significant relationships between capital structure and some board of directors characteristics, such as size, independence and CEO duality. Finally, we find significant influence of institutional participation and profitability on capital structure policy. These findings add new evidence to the existing literature about capital structure determinants and provide a confirmation of the significant effects of both earnings management and board of directors characteristics on the company's debt level.
Keywords: earnings management; capital structure; board of directors’ characteristics.
Special Issue on: Contemporary Issues in Islamic Accounting and Finance Research
Ethical values in auditing from the Islamic perspective by Hossein Sayyadi Tooranloo, Pedram Azizi Abstract: This study aims to derive a model of ethical values that concern auditing from the Islam viewpoint using the Interpretative Structural Modelling (ISM) approach. ISM is a systematic and structured method for understanding the relationships between individually or collectively interdependent elements of a complex system. After reviewing the related literature and semi-structured interviews with auditing experts, 15 auditing-related ethical values from the Islamic perspective were identified. The ISM method was then used to determine the levels and priorities of identified values and their relationships with each other. Finally, a MICMAC diagram analysis was performed to determine the driving power and dependence power of the values. MICMAC analysis facilitates further examination of the domain of effect of each study variable based on the obtained driving and dependence powers. In the MICMAC analysis, the ethical value Independence was found to have a strong driving power (15) and a weak dependence power (6), and is thus recognised as the cornerstone of the audit profession. Auditor independence is an essential element of users trust in the analysis of financial statements, and neglecting it neutralises the effect of many other values. The value Objectivity in investigation and avoiding preconception was found to have a weak driving power (6) and a strong dependence power (15), reflecting a strong dependence on its lower levels. This suggests that neglecting other values severely undermines the objectivity of the audit. Keywords: ethical values; audit; Islam; interpretative structural modelling.