Corporate governance is one of the well researched areas. I will like to assess the effect of corporate governance on financial reporting quality. What are some of the important variables that should be used in assessing corporate governance and financial reporting quality? Your contributions would be very much appreciated.
Hi Evans,
I think you should pay attention to board characteristics, ownership structure, and monitoring mechanism of firms (both internal and external).
Common corporate governance variables used to study FRQ may include: CEO Duality (be both CEO and Chairman or not), Auditor (Big 4 or not), Managerial ownership percentage, ownership types and percentages, etc...
You can find many more for your study when you conduct literature view. Hope those keywords help.
A mon vis, il existe plusieurs variables tels que:
- la rémunération du dirigeant et les facteurs incitatives de ce dernier;
- le pourcentage de la présence des administrateurs externes par rapport aux membres total du conseil d'administration;
- la qualité du comité d'audit;
- le système de la production de l'information financière et sa sécurité;
- la qualité de l'audit externe;
- les pratiques comptables et la gestion du résultat.
The critical variables of Corporate Governance (CG) are mainly four that is Transparency, Fairness, Accountability and Responsibility. there are others but these are the basic principles of CG
You can employ corporate governance mechanisms such as board composition, ownership structure (eg, managerial ownership, institutional ownership, family ownership), directors' remuneration, etc.
Thank you all very much. I am very grateful.
Please I would like to know possible variables to be considered for financial reporting quality.
Financial reporting quality can be assessed through qualitative characteristic dimensions and general adherence to IFRS
Attention should be on Audit report considering the emphasis for the matter. Board and ownership structure vis-a-vis the code of corporate governance of the country.
for corporate governance the variables can be for example board ,audit committee.external auditor and internal auditor characteristics . for quality , the variables can be for example information relevance , earnings persistence .
For financial reporting quality, you can look at, for example, earnings quality, relevance of accounting information.
Evans O. N. D. Ocansey you would need to design your own metrics of measuring financial reporting quality - which in turn would be your novelty in your study.
Since there are many variables that can be taken into consideration when measuring financial reporting quality such as 1) compliance to IFRS or local FRS 2) compliance to the local Corporate Governance Code 3) publication of the CSR report. 4) publication of the Sustainability Report (within Annual Report or as stand-alone). 5) publication of Integrated Report to replace the traditional Annual Report - the list here is not exhaustive as you may want to include other behavioural variables as well...
The combination of the proposed variables above could be included as your independent variables or moderator variables or even mediator variables.
You may want to select FINANCIAL REPORTING quality as your dependent variable but you would need to select proxies to represent on what should be measured as financial reporting quality, for example 1) GRI Award for Best Sustainability Report 2019 (award winner)
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