The relationship between corporate governance mechanisms and company attributes and accounting conservatism of Jordanian listed companies

• Main Author: Al-Sraheen, Dea'a Al-Deen Omar Nawwaf
• Format: Thesis
• Language: English; English
• Published: 2014
• Subjects: HF5601-5689 Accounting
• Online Access: https://etd.uum.edu.my/4309/1/s93663.pdf; https://etd.uum.edu.my/4309/2/s93663_abstract.pdf; https://etd.uum.edu.my/4309/

This study examines the relationship between the corporate governance mechanisms related to the ownership structure, board of directors, audit committee and auditor quality along with company attributes and the accounting conservatism of Jordanian listed companies. The theoretical foundation of such a relationship was provided by five comprehensive theories which are the agency theory, the positive accounting theory, the resource dependence theory, stewardship and the signaling theory. The data were obtained from the annual reports of 348 Jordanian companies from 2009 to 2011. Upon using the multiple regression analysis, the results show that the relationship between the corporate governance mechanisms and accounting conservatism was somewhat varied. Fifteen hypotheses were developed in this study. Seven of them were significant while eight were not. For ownership structure, institutional and foreign ownership were significant while family and managerial ownership were not statistically significant. Board independence, financial expertise and board tenure were significant, while board size, CEO and multiple directorships were not significant due to the higher level of P-value compared to 0.05. On the other hand, audit committee and auditor independence were statistically significant to conservatism, while auditor brand name, company size and debt contract were reported to be negatively and not significantly related to conservatism. These results indicate that corporate governance plays a vital role in enhancing the level of conservatism and reducing agency conflict. Further, regulator bodies in Jordan should increase the effectiveness of corporate governance in Jordanian companies in order to enhance the quality of financial reports. In addition, this study opens up avenues for more studies on accounting conservatism not only in Jordan, but also in other countries where this area of study is lacking. Furthermore, it opens up opportunities and provides avenues for more in-depth research related to the quality of financial reports.