SACM - United Kingdom
Permanent URI for this collectionhttps://drepo.sdl.edu.sa/handle/20.500.14154/9667
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Item Embargo The Impact of eXtensible Business Reporting Language (XBRL) on Financial Reporting Quality: The Case of Saudi Arabia(Queen Mary University of London, 2024) Alangary, Bushra; Mitrou, Evisa; Tsitsianis, NicholasThis thesis explores the impact of the eXtensible Business Reporting Language (XBRL) on financial reporting quality (FRQ), within the unique regulatory and economic context of Saudi Arabia. XBRL, a digital standard for financial reporting, has been globally recognised for its potential to enhance the efficiency, accuracy, and accessibility of financial information. While prior research predominantly focuses on the United States, this study shifts the attention to Saudi Arabia, a unique and rapidly developing market that mandated XBRL adoption in 2015 without introductory phases. Thus, my original contribution to knowledge is providing new insights into how XBRL influences financial reporting in a different socio-economic and regulatory environment, utilising a comprehensive measure of FRQ and including moderating factors. This study assesses FRQ through three main proxies: earnings management, reporting timeliness, and information asymmetry. Earnings management is measured using its two forms Accrual Earnings Management (AEM) and Real Earnings Management (REM), while timeliness and information asymmetry are assessed through reporting lags and bid-ask spreads, respectively. Also, this study tests the moderating effect that Managerial Ability (MA) and Corporate Governance (CG) have on the association between XBRL and FRQ. A quantitative approach is employed, utilising a dataset of publicly listed companies in Saudi Arabia from 2010 to 2021, examining financial reports before and after XBRL mandate. Through a comprehensive analysis, the study finds that XBRL mandate in Saudi Arabia increases earnings management, conditionally enhances timeliness, and weakly reduces information asymmetry. While the moderating effect of MA and CG vary across FRQ proxies, yet in general CG has limited effect compared to MA. The results of this thesis challenge the findings of prior literature as the positive effect of XBRL adoption appears to be conditional to the implementation approach, the aim of the implementation, and the socio-economic setting. The implications of these findings are profound in several aspects. For regulators, the results support the continued adoption and promotion of XBRL, not only in Saudi Arabia but also in other emerging markets with similar characteristics. For companies, the findings highlight the importance of investing in digital reporting tools to improve reporting quality and transparency. For investors, the study underscores the benefits of XBRL in reducing risks associated with information asymmetry. Overall, this research contributes to the broader understanding of XBRL’s potential to elevate financial reporting standards globally, particularly in similar economic environments.29 0Item Restricted THE EFFECTS OF CEO GREEDINESS AND PEER COMPENSATION ON THE QUALITY OF FIRMS’ FINANCIAL INFORMATION(The University of Nottingham, 2024-04-03) Alhossini, Abdullah A.; Kim, Ja Ryong; Nguyen, Huy NguyenGiven the severe consequences of low-quality financial information from firms—such as eroding investor trust and even triggering financial crises—its determinants have drawn significant attention from regulators, investors, and researchers. Nevertheless, serious oversights prevail in the accounting literature, particularly concerning greedy CEOs, who harbor intense desires for extraordinary material wealth at others’ expense, jeopardize firms’ sustainability, and even contributed to recent financial scandals. Specifically, despite their various social and organizational implications, the effects of CEO greediness on the quality of firms’ financial information have been neglected. The current thesis, however, fills this gap in the existing literature by investigating both the separate then the integrated impacts of CEO greediness along with CEO compensation at peer firms on financial information quality. First, using a 1992–2019 U.S. sample with 23,837 firm-year observations and three proxies for measuring CEO greediness, the research findings demonstrate a positive association between CEO greediness and the extensive use of earnings management, ranging from accrual-based earnings management, real earnings management, and classification shifting to opportunistic non-GAAP earnings disclosure. These findings highlight the multifaceted approach to earnings management that greedy CEOs employ. Moreover, the research finds that external auditors charge higher fees to and are more likely to resign from clients with greedy CEOs, indicating auditors’ perceived risk of CEO greediness on financial information quality. When comparing changes in earnings management practices and auditors' decisions around CEO transitions—where incoming and outgoing CEOs exhibit varying levels of greediness—it reinforces the study's conclusion that CEO greediness adversely affects the quality of a firm's financial information. Next, investigating the influences of peer firms’ CEO compensation on a firm’s financial information quality, this study—using a text-based measure to identify peer firms and a consequent 1992–2019 sample of 23,371 observations—finds a negative association between peer firms’ CEO compensation and a firm’s financial information quality, as measured by accrual-based and real earnings management, classification shifting, and non-GAAP earnings. The findings also show a positive relationship between peers’ CEO compensation and both external audit fees and auditor resignations. Finally, examining the moderating role CEO greediness plays in the peer compensation-information quality nexus, this study finds that CEO greediness exacerbates the above negative association and renders the above positive relationships more pronounced. Overall, the findings suggest that as peers' CEO compensation rises, the focal CEO is more likely to employ varied earnings management strategies to boost their personal gains, with CEO greediness significantly intensifying this relationship. The research contributes to the literature on CEO greediness, compensation, and financial information quality. The findings emphasize the significant role of CEO greediness and peers’ CEO compensation in shaping the quality of firms' financial information, providing valuable insights for shareholders, regulators, and broader corporate governance. Theoretically, the research emphasizes the notion that CEO personality traits interact with economic incentives they face to affect CEO decisions, thereby further enhancing understanding of the variations in behavioral responses to incentives such as peer compensation. Methodologically, the study integrates four dominant measures of earnings management to capture a holistic picture of information quality while also considering auditors' perspectives, thereby expanding the extant literature’s narrow focus on limited measures, despite the potential substitute nature intrinsic to these measures.25 0Item Restricted Gender Diversity and Earnings Management(2023-06-22) Arishi, Ali; Jaafar, AzizThis study explores the relationship between gender diversity and the level of earnings management practices among the UK listed firms. The investigation is conducted using the panel regression analysis. The period of analysis spans through 2009-2020. The outcomes of the study evidence that there is no statistically significant relationship between the presence of women on the board and the level of earnings management. Among other board features, the presence of foreign directors is associated with lower level of earnings management whereas greater age diversity of directors positively contributes to earnings manipulation. In addition, higher financial leverage is connected with lower earnings management proving that debt financing can be used as a control mechanism in firms. The linkage between revenue growth and earnings management is, on the contrary, positive suggesting that faster growing companies are more likely to engage in earnings management.32 0Item Restricted The Effect of Corporate Governance Mechanisms on Earnings Management Practices in Saudi Listed Companies(University of Glasgow, 2023-06-26) Almalki, Bayan; Guidi, Marco; Opong, KwakuThe main objective of this thesis is to examine the impact of corporate governance mechanisms on earnings management practices in Saudi Arabia. To achieve this aim, the study first analyses the relationship between the level of compliance with the Saudi Corporate Governance Code (SCGC) and earnings management practices by employing a self-constructed corporate governance index (i.e., the compliance-index model), derived mainly from the 2017 Saudi Corporate Governance Code. Second, the study examines the association between a number of individual corporate governance mechanisms (i.e., the equilibrium-variable model) and earnings management practices in Saudi listed firms. Third, it examines the influence of family ownership on the association between corporate governance mechanisms (measured by a comprehensive governance index) and earnings management practices in Saudi listed firms. Through use of a sample of 112 Saudi listed firms between 2006 and 2017 (i.e., 994 firm-year observations) together with insights from agency theory, the compliance index model produces results showing a statistically significant and negative association between the Saudi Corporate Governance Index (SCGI) and the level of earnings management practices. However, this result does not hold for firms with high family ownership, since the results reveal that the effectiveness of corporate governance (measured by the SCGI) in constraining earnings management is reduced in Saudi firms with high family ownership. In a series of sensitivity analyses, this evidence is robust to (i) alternative earnings management models, (ii) endogeneity, and (iii) alternative proxy for family control. Regarding the equilibrium-variable model, the results indicate that Saudi firms are likely to have lower levels of earnings management practices if they have a high percentage of strictly independent directors on the boards, a larger board size, and audit committees that meet more often. Additionally, the results show that Saudi firms with higher government ownership, institutional ownership and family ownership have lower levels of earnings management practices. In contrast, the current study did not find any evidence that the strict independence of audit committee index, percentage of directors with multiple directorships, percentage of family directors on the board and percentage of blockholders ownership have any significant relationship with the extent of earnings management practices in the Saudi firms. Also, the study found that non-strict board/audit independence is not effective in reducing earnings management practices in Saudi firms. These results are moderately robust to (i) alternative earnings management models, (ii) endogeneity, and (iii) alternative proxies for strict board independence. Finally, the findings of this study indicate the effectiveness of the governance provisions provided in the 2017 Saudi Corporate Governance Code in improving governance practices in the Saudi context.26 0