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Corporate Governance and Accounting Conservatism: Moderating role of Audit Quality and Disclosure Quality

Author

Listed:
  • Muhammad Bilal Saeed

    () (Capital University of Science and Technology, Islamabad)

  • Syed Kashif Saeed

    (Pakistan Institute of Engineering & Applied Sciences, Islamabad)

Abstract

This study investigates the moderating role of audit quality and disclosure quality on the association between corporate governance and accounting conservatism in three emerging economies of South Asia from 2009 to 2015. Complex corporate governance structures make expropriation of minority shareholders easier due to greater opportunities for controlling shareholders, thus allowing them to cloak their malpractices through accounting conservatism. We find that the level of accounting conservatism is positively associated with corporate governance stature, and higher audit quality and disclosure quality weakens this association. Our results suggest that users of financial statements should consider audit quality and disclosure quality for the evaluation of firms especially in environments where corporate governance is complex, ownership is concentrated and markets are still developing

Suggested Citation

  • Muhammad Bilal Saeed & Syed Kashif Saeed, 2018. "Corporate Governance and Accounting Conservatism: Moderating role of Audit Quality and Disclosure Quality," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(2), pages 123-150, June.
  • Handle: RePEc:bec:imsber:v:10:y:2018:i:2:p:123-150
    DOI: dx.doi.org/10.22547/BER/10.2.6
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    File URL: http://imsciences.edu.pk/files/journals/vol-10_2/Paper%206.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Accounting Conservatism; Audit Quality; Corporate Governance; Disclosure Quality.;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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