The linkage between conservative accounting and financial adequacy and the moderating role of corporate governance

• Autorzy: Aladwan Mohammad Suleiman , Samara Husni Hasan , Hani Laith Yousef Bani , Alrajabi Somaya Abd Alhaleem

Identyfikatory

DOI

10.17512/pjms.2024.29.1.01

Warianty tytułu

PL

Powiązanie między konserwatywną rachunkowością a adekwatnością finansową oraz moderująca rola ładu korporacyjnego

• Języki publikacji: EN

Abstrakty

EN

The current study aims to verify the influence of the practices of conservative accounting on financial adequacy measured by four measures, namely the return on assets (ROA), return on equity (ROE), earnings per share (EPS) and Tobin’s Q expressed by price to book value (P-BV). The study model was adapted to include corporate governance variables as moderating variables on the relationship between accounting conservatism and financial adequacy; four governance mechanisms were engaged. The study is distinguished by its incorporation of conservative accounting into corporate governance. Data was collected about Jordanian-listed industrial companies from 2012-2020. The methodology employed statistical methods such as correlation and multiple regression tests in order to convey assumed correlations. The results of the study provided conclusive empirical evidence for the positive statistical impact of accounting conservatism on return on assets, return on equity and earnings per share, while the results failed to ascertain any effect of accounting conservatism on the market value measured by price to book value. The results of the study also did not advocate any evidence for the moderating role of corporate governance on the relationship between conservative accounting and financial adequacy.

PL

Niniejsze badanie ma na celu weryfikację wpływu praktyk konserwatywnej rachunkowości na adekwatność finansową mierzoną czterema miarami, a mianowicie zwrotem z aktywów (ROA), zwrotem z kapitału własnego (ROE), zyskiem na akcję (EPS) i Q Tobina wyrażonym przez cenę do wartości księgowej (P-BV). Model badania został dostosowany do uwzględnienia zmiennych ładu korporacyjnego jako zmiennych moderujących związek między konserwatyzmem rachunkowości a adekwatnością finansową; zaangażowano cztery mechanizmy zarządzania. Badanie wyróżnia się włączeniem konserwatywnej rachunkowości do ładu korporacyjnego. Dane dotyczyły jordańskich spółek przemysłowych notowanych na giełdzie w latach 2012-2020. W metodologii zastosowano metody statystyczne, takie jak testy korelacji i regresji wielokrotnej, w celu przedstawienia założonych korelacji. Wyniki badania dostarczyły jednoznacznych empirycznych dowodów na pozytywny statystyczny wpływ konserwatyzmu rachunkowego na zwrot z aktywów, zwrot z kapitału własnego i zysk na akcję, jednocześnie nie potwierdziły żadnego wpływu konserwatyzmu rachunkowego na wartość rynkową mierzona stosunkiem ceny do wartości księgowej. Wyniki badania nie dostarczyły również żadnych dowodów na moderującą rolę ładu korporacyjnego na związek między konserwatywną rachunkowością a adekwatnością finansową.

Słowa kluczowe

EN

Tobin’s Q; Financial Leverage; Corporate Governance; conservative account; financial adequacy

PL

dźwignia finansowa; ład korporacyjny; konserwatywna rachunkowość; metoda q Tobina; wystarczalność kapitału

• Wydawca: Czestochowa University of Technology
• Czasopismo: Polish Journal of Management Studies
• Rocznik: 2024
• Tom: Vol. 29, No. 1
• Strony: 7--23
• Opis fizyczny: Bibliogr. 37 poz., rys. tab.

Twórcy

autor

Aladwan Mohammad Suleiman

• Department of Accounting, Business School, The University of Jordan; Jordan
• [e-mail]

• https://orcid.org/0000-0002-8721-5703

autor

Samara Husni Hasan

• Faculty of Economics, Department of Accounting; University of Valencia, Spain

• https://orcid.org/0009-0002-8807-8349

autor

Hani Laith Yousef Bani

• Department of Commerce & Management Studies, Andhra University, India

• https://orcid.org/0000-0002-4233-1516

autor

Alrajabi Somaya Abd Alhaleem

• Master in Sustainable Development, Al-Quds University, Palestine

• https://orcid.org/0009-0003-9114-1211

Bibliografia

• 1. Abdul Majid, E., Mohammad, S., (2018). Study Effect of Fluctuations in Macroeconomic Indicators on Unconditional Conservatism. Academic Journal of Accounting and Economic Researches, 7(1), 25-31.
• 2. Ademola, O. J., Moses, O. I., (2017). Accounting Conservatism and its Benefits to Shareholders in Developing Capital Market, Evidence from Nigeria. Journal of Accounting and Finance, 17(1), 89-96.
• 3. Affes, H., Sardouk, H., (2016). Accounting Conservatism and Corporate Performance: The Moderating Effect of the Board of Directors. Journal of Business & Financial Affair, 5(2), 1-6.
• 4. Ahmed, A. S., Duellman, S., (2011). Evidence on the Role of Accounting Conservatism in Monitoring Managers' Investment Decisions. Accounting and Finance, 51(3), 609-633.
• 5. Aladwan, M. Almaharmeh, M. and Alsinglawi, O., (2021). Exploring Stock Market Variables and Weighted Market Price Index: The Case of Jordan. Journal of Asian Finance, Economics and Business, 8(3), 977-985.
• 6. Aladwan, M., Shatnawi, Y., (2019). The Association between Accounting Disclosures and Stock Market Price. International Journal of Managerial and Financial Accounting, 11(1), 73-92.
• 7. Al-Ramahi, N., Abuhussein, A. and Shahwan, Y., (2021). The Impact of Applying the XBRL on the Quality of Annual Reports of the Firms Listed in Amman Stock Exchange. In 2021 22nd International Arab Conference on Information Technology, IEEE (ACIT), 1-5.
• 8. Al-Theibeh, Z. A. H., Al-hyari, O. A. and Hamza, M., (2018). Impact of Financial and Non-Financial Voluntary Disclosure on Stock Liquidity for Jordanian Industrial Shareholding Companies Listed on Amman Stock Exchange. International Journal of Business and Management, 13(12), 125-139.
• 9. Al-Zahra, K., (2017). Accounting Conservatism Practices and Their Impact on Improving the Efficiency of Investment Decisions and Enhancing the Value of the Company. Al-Ghari Journal of Economic and Administrative Sciences, 14(3), 374-404.
• 10. Aminu, L., Hassan, S. U., (2017), Accounting Conservatism and Financial Performance of Nigerian Deposit Money Banks: An Analysis of Recent Economic Recession. International Journal of Business Policy & Governance, 4(12), 124-135.
• 11. Beaver, W., Ryan, S., (2005). Conditional and Unconditional Conservatism: Concepts and Modeling. Review of Accounting Studies, 10(2-3), 269-309.
• 12. Chan, K., Chan, K. C., Jegadeesh, N. and Lakonishok, J., (2006), Earnings Quality and Stock Returns. Journal of Business, 79(3), 1041-1082.
• 13. Chen, A., James, J., (2019). Accounting comparability, financial reporting quality, and the pricing of accruals. Advances in Accounting, 45, 100415, 1-16.
• 14. Chiraz, D., Anis, J., (2013). Earning Management and Performance of French IPO Companies. Journal of Accounting and Taxation, 5(1), 1-14.
• 15. Etale, L. Joel, U. and Empere, C., (2022). Accounting Conservatism And Financial Performance of Listed Consumer Services Sector Companies In Nigeria. Journal of Human Resources Management, 3(1), 88-97.
• 16. Fouad, R., (2016), The Impact of Commitment to Apply International Accounting Standards IAS - IFRS on Accounting Conservatism and the Quality of Financial Reports, An Applied Study. Journal of Accounting Thought, 20(2), 517-572.
• 17. García Lara, J. M., Garcia Osma, B. and Penalva, F. (2009). Accounting conservatism and corporate governance. Review of Accounting Studies, 14(1), 161-201.
• 18. Givoly, D., Hayn, C., (2000). The changing time-series properties of earnings, cash flows, and accruals: has financial reporting become more conservative? Journal of Accounting and Economics, 29(3), 287-320.
• 19. Johnson, S., Mitton, T., (2003). Cronyism and capital controls: evidence from Malaysia. Journal of Financial Economics, 67(2), 351-382.
• 20. Kalbers, L. P., Fogarty, T. J., (1998). Organizational and economic explanations of audit committee oversight. Journal of Managerial Issues, 10(2), 129-150.
• 21. LaFond, R., Roychowdhury, S., (2008). Managerial ownership and accounting conservatism. Journal of Accounting Research, 46(1), 101-135.
• 22. Larcker, D. F., Richardson, S. A. and Tuna, A. I., (2007), “Corporate governance, accounting outcomes, and organizational performance”. Accounting Review, 82(4), 963-1008.
• 23. Li, X., (2015). Accounting Conservatism and the Cost of Capital: International Analysis. Journal of Business Finance & Accounting, 42(5&6), 555-582.
• 24. Lobo, J., Neel, M. and Rhodes, A., (2018). Accounting comparability and relative performance evaluation in CEO compensation. Review of Accounting Studies, 23, 2995039, 1-44.
• 25. Madbouly, D., (2017). The level of the accounting conservatism in the financial statements of family and nonfamily companies listed on the Egypt Stock Exchange, a comparative applied study. Journal of the College of Commerce for Global Research, 1(54), 3-38.
• 26. Maswadeh, S. N., (2016). The effect of accounting conservatism on Financial Performance Indicators in the Jordanian Insurance Companies. Journal of Internet Banking and Commerce, 21(1), 1-12.
• 27. Purnama, D., (2019). Capital Structure, Accounting Conservatism, Intellectual Capital and Financial Performance: Its Impact on Stock Prices. Indonesian Journal Of Business And Economics, 2(2), 45-63.
• 28. Ramadan, I. Z., (2015). Earnings quality determinants of the Jordanian manufacturing listed companies. International Journal of Economics and Finance, 7(5), 140-146.
• 29. Ramalingegowda, S., Yu, Y., (2018). The Role of Accounting Conservatism in Capital Structure Adjustments. Journal of Accounting, Auditing & Finance. 36(2), 223-248.
• 30. Sana’a, N. M., (2016). The Effect of Accounting Conservatism on Financial Performance Indicators in the Jordanian Insurance Companies. Journal of Internet Banking and Commerce, 21(1), 1-16.
• 31. Shahwan, Y., Almubaydeen, T. H., (2020). Effects of board size, board composition and dividend policy on real earnings management in the Jordanian listed industrial firms. International Journal of Financial Research, 11(4), 195-202.
• 32. Shahwan, Y., Hamza, M., Al-Fasfus, F., Al-Ramahi, N. and Almubaydeen, T. H., (2022). Social Responsibility Accounting, Disclosure and Real Practice: Evidence from Jordan. Asian Economic and Financial Review, 12(3), 164-182.
• 33. Thomas, G., Aryusmar, A. and Indriaty, L., (2020). The effect of effective tax rates, leverage, litigation costs, company size, institutional ownership, public ownership and the effectiveness of audit committees in accounting conservatism at public companies LQ45. Journal of Talent Development and Excellence, 12(1), 85-91.
• 34. Udayasankar, K., Das, S. S., (2007). Corporate governance and firm performance: the effect of regulation and competitiveness. Corporate Governance: An International Review, 15(2), 262-271.
• 35. Wang, R. Z., (2013). Operating risk and accounting conservatism: an empirical study. The International Journal of Business and Financial Research, 7(1), 55-68.
• 36. Watts, R. L., (2003). Conservatism in Accounting Part I: Explanations and Implications. Accounting Horizons, 17(3), 207-221.
• 37. Wolk, H., Dodd, J. and Rozycki, J., (2013). Theory Accounting, Conceptual Issues in a Political and Economic Environment, (8thed). United States of America, Sega Publications.

Uwagi

Opracowanie rekordu ze środków MNiSW, umowa nr SONP/SP/546092/2022 w ramach programu "Społeczna odpowiedzialność nauki" - moduł: Popularyzacja nauki i promocja sportu (2024).