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Does External Audit Quality Moderate the Relationship Between CEO Entrenchment and Financial Communication Quality? Evidence from French Companies

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  • Dhouha Bouaziz

Abstract

Purpose: This paper aims to explore how external audit quality moderates the relationship between CEO’s entrenchment and financial communication quality. Design/Methodology/Approach: The study investigates the impact of CEO entrenchment on the quality of financial communication in a sample of 151 French companies listed on Euronext Paris over a 10-year period. The findings reveal a significantly positive association between CEO entrenchment and financial communication quality, evident across measures such as CEO duality and ownership. This suggests that CEOs holding dual roles wield more power and are more inclined to engage in earnings management, exacerbating agency issues. Additionally, the study identifies a notable negative correlation between CEO age and financial communication quality, indicating that older CEOs may be more prone to accounting manipulation. Findings: The findings underscore the importance of implementing governance standards to mitigate information asymmetry among stakeholders and curb managerial opportunism. Practical Implications: Originality/Value:

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  • Dhouha Bouaziz, 2025. "Does External Audit Quality Moderate the Relationship Between CEO Entrenchment and Financial Communication Quality? Evidence from French Companies," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 15(3), pages 101-129.
    • Handle: RePEc:ers:ijfirm:v:15:y:2025:i:3:p:101-129
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    Keywords

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    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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