Hichem Khlif

The determinants of corporate disclosure: a meta-analysis

Purpose – The purpose of this paper is to investigate the association between disclosure and seven corporate characteristics which are ownership dispersion, analysts following, audit firm size, leverage, corporate size, profitability, and multi‐nationality.Design/methodology/approach – The paper applies the meta‐analysis technique developed by Hunter et al. in 1982 to a sample of 16 articles published between 1997 and 2006 for the purpose of cumulating and integrating the findings across studies.Findings – The paper shows a significant association between disclosure and audit firm size.Originality/value – The paper is an extension of previous work of Ahmed and Courtis to the extent that it includes other determinants of disclosure not included in prior works. It also aims at reconciling the inconsistent results of prior studies.

The effect of national culture on the association between profitability and corporate social and environmental disclosure: A meta-analysis

Purpose - – This paper aims to investigate the moderating effect of cultural dimensions (masculinity, individualism and long-term orientation) on the association between profitability and corporate social and environmental disclosure (CSED). Design/methodology/approach - – The authors apply the meta-analysis technique developed by Hunter Findings - – The authors find that masculinity, individualism and long-term orientation moderate the association between profitability and CSED. Given the weight of US studies on the overall sample, the authors conduct a sensitivity analysis to examine how this factor may affect the findings. After excluding these studies, only long-term orientation and individualism remain strong moderators of the association between profitability and CSED. Originality/value - – This study provides further evidence on the impact of institutional frameworks on CSED. It has, also, policy implications for managers of multinational corporations.

Internal Control Quality, Egyptian Standards on Auditing and External Audit Delays: Evidence from the Egyptian Stock Exchange

This paper examines the impact of internal control quality (ICQ) on external audit delays as proxied by the auditor component of audit report lag (A‐ARL) and the effect of the adoption of the Egyptian Standards on Auditing (ESA) on this relationship in the Egyptian context. Using a balanced panel data of 344 firm‐year observations spanning from 2007 to 2010, we hypothesise and empirically find the following. First, ICQ represents a key determinant of timely disclosure, as it contributes significantly to the reduction of A‐ARL. Second, the adoption of the ESA has significantly contributed to the improvement of audit practices by reducing A‐ARL. Third, the adoption of ESA has also strengthened the relationship between A‐ARL and ICQ for the post‐adoption period of these standards. Additional analysis is conducted to examine the impact of industry characteristics on the relationship between ICQ and A‐ARL and the association remains significant regardless of the sector considered. In order to make a more informative analysis, we examine the effect of ICQ on the management component of audit report lag (M‐ARL) and we document a positive association between both variables. The results contribute to the literature dealing with the relation between A‐ARL and ICQ by shedding light on the importance of ICQ in audit practices in an emerging country characterised by weak legal enforcement and a high level of secrecy. Findings also have policy implications for Egyptian standard‐setters with respect to the development of internal auditing standards.

Corporate social and environmental disclosure and corporate performance: Evidence from South Africa and Morocco

Purpose – The purpose of this paper is to investigate the relationship between corporate performance and social and environmental disclosure for two African leading countries namely, South Africa (common law country) and Morocco (civil law country). Design/methodology/approach – The sample consists of 168 annual reports spanning from 2004 to 2009. A content analysis of companies’ annual reports is used to measure the extent of voluntary social and environmental disclosure. Findings – Results show that social and environmental disclosure has a significant positive effect on corporate performance only in the South African setting. Originality/value – The findings emphasize the need to explicitly consider the legal and institutional setting prevailing in each context. For instance, social and environmental organizations in South Africa enjoy more power to influence companies’ social and environmental reporting policy, whereas, their counterparts in Morocco, enjoy less power to place pressure on companies to ...

The association between risk disclosure and firm characteristics: a meta-analysis

The empirical literature on the determinants of risk disclosures offers mixed results. This complicates efforts among stakeholders to understand the factors affecting firms’ decision to report risk information. The aim of our paper is to analyze the findings of 42 empirical studies using a meta-analysis technique. We examine whether differences in the findings are attributable to random error or due to legal and institutional systems, uncertainty avoidance, disclosure regime (mandatory vs. voluntary), industry types, and the proxies used to measure corporate characteristics. We find that all moderators affect the relationship between corporate size and risk reporting. Legal system, disclosure regime, industry types, and leverage ratio measurement moderate the association between leverage ratio and risk disclosure. Industry types and uncertainty-avoidance level affect the relationship between profitability and risk disclosure. Finally, the association between risk factor and risk disclosure is moderated by industry types. We discuss the implications of our findings and offer suggestions for future research.

Adoption of and compliance with IFRS in developing countries

Purpose – The purpose of this paper is to review a synthesis of theories and empirical studies dealing with the adoption of and compliance with IFRS in developing countries in an attempt to provide directions for future research. Design/methodology/approach – The review focusses on four main streams including: first, the motives for IFRS adoption; second, corporate characteristics and the degree of compliance with IFRS; third, the economic consequences of IFRS adoption and finally; fourth, the use of regulation as an enforcement mechanism to monitor compliance with IFRS. The authors review empirical studies specifically devoted to developing countries. Findings – Regarding the first stream relating to IFRS adoption, the macroeconomic decision of adopting IFRS in developing countries can be justified by two main theories which are: the economic theory of network (Katz and Shapiro, 1985) and isomorphism (DiMaggio and Powell, 1991), however, empirical evidence in developing countries to confirm these theorie...

Ownership structure and voluntary disclosure: A synthesis of empirical studies:

In this article, we meta-analyse 69 empirical studies assessing the association between corporate voluntary disclosure and ownership concentration and types, and how institutional characteristics and research design moderate these relationships. Our overall analyses show that state, foreign and institutional ownerships have a positive effect but managerial ownership and ownership concentration have a negative effect on voluntary disclosure. Since the overall effect may conceal the underlying factors that cause heterogeneity in the effect size distribution, we select two important institutional factors: country-level investor protection and the equity market development, and research design and journal quality, to explain the mixed and conflicting findings. Our results emphasise the need to consider legal and institutional characteristics, and researcher induced-artefacts, in understanding the role of ownership structure and identity in corporate voluntary disclosure.

Hofstede’s cultural dimensions in accounting research: a review

Purpose This paper aims to review the use of Hofstede’s cultural dimensions in accounting research over the period 1995-2015. Design/methodology/approach The author combines electronic and manual searches to identify relevant studies using key words like “national culture” or “Hofstede’s cultural dimensions” and “accounting” or “auditing” or “taxation”. The search yields a total number of 35 published studies. For each reviewed stream of research, the author presents its theoretical underpinning and summarises its main results. Findings The paper identifies four main accounting research topics being reporting policy, auditing, taxation and miscellaneous accounting. These studies use three main methodologies including empirical, experiment and meta-analysis. The review reveals that individualism is positively related to corporate reporting policy, while it is associated with low levels of tax evasion. High levels of masculinity are generally associated with low disclosure environments and aggressive accounting manipulations. Finally, long-term orientation has been examined with respect to social environmental disclosure, and findings are supportive of a positive association between both variables. Originality/value This literature review represents a historical record, an introduction and a guidance for researchers who aim to examine whether Hofstede’s cultural dimensions may be useful in explaining other accounting phenomena. It also presents the main criticisms addressed to Hofstede’s framework. Finally, it conducts a critical analysis for reviewed studies and highlights their reductionist approach in explaining accounting phenomena and methodological weaknesses.

Audit committee activity and internal control quality in Egypt: Does external auditor’s size matter?

Purpose - – The purpose of this paper is to examine the association between audit committee activity, external auditor’s size and internal control quality (ICQ) in the Egyptian setting. It also explores how external auditor’s size moderates the relationship between audit committee activity and ICQ. Design/methodology/approach - – To obtain relevant information about ICQ in Egypt, the authors conducted a survey among external auditors using an internal control checklist. Findings - – Results show that audit committee activity has a significant positive effect on ICQ. In addition, Big 4 auditors contribute significantly to the improvement of the ICQ in the Egyptian setting. Finally, the association between audit committee activity and ICQ is more pronounced when an organisation is audited by a Big 4 audit firm. Originality/value - – The results this paper demonstrate that Big 4 auditors play a governance role in weak legal environment as exists in Egypt by strengthening the effectiveness of audit committee meetings. The findings also have policy implications for Egyptian standard-setters and other emerging economies characterised by an under-developed and poorly regulated audit market, with respect to the development of internal auditing standards.

Disclosure, ownership structure, earnings announcement lag and cost of equity capital in emerging markets: The case of the Egyptian stock exchange

Purpose - – The purpose of this paper is to examine the effect of voluntary disclosure, ownership structure attributes and timely disclosure on cost of equity capital in the emerging Egyptian capital market. Design/methodology/approach - – A content analysis of annual reports is used to measure the extent of voluntary disclosure. Earnings announcement lag (EAL) is used to measure the quality of voluntary disclosure (i.e. timely disclosure). Finally, the Capital Asset Pricing Model (CAPM) framework is used to estimate cost of equity capital. Findings - – The authors find a negative relationship between the level of voluntary disclosure and cost of equity capital. More specifically, the authors document that this association is strongly significant under high ownership dispersion, low government ownership and shorter EAL. Finally, EAL is positively associated with cost of equity capital. Research limitations/implications - – The authors use the CAPM framework as a proxy for the cost of equity since forecasted earnings per share are not communicated by financial analysts in the Egyptian Stock Exchange. Practical implications - – The findings demonstrate for managers that the increased levels of voluntary and timely disclosure reduce the cost of external finance and improve the marketability of firms’ equities, which may directly impact growth opportunities especially when information is communicated to investors in a timely fashion. For regulators, it provides evidence that high government ownership reduces the value relevance of voluntary disclosure among investors, while free float as a proxy for high ownership dispersion improves it. Originality/value - – The findings show that corporate disclosure policy depends more on the managers’ incentives to provide informative annual reports than on standards and regulations. The study also represents a first attempt that demonstrates how ownership structure and timely disclosure influence the relationship between disclosure and cost of equity capital.