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Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market

The impact of monitoring mechanisms on financial reporting continues to be a topic of debate among academics, regulators and practitioners. This study focuses on whether internal and external monitoring mechanisms are related to financial reporting credibility. The study seeks to answer the main res...

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Main Author: Alreyami, Saleh Ahmed Mohammed
Format: Thesis
Language:English
English
Published: 2012
Subjects:
HG Finance
Online Access:https://etd.uum.edu.my/3512/1/s90954.pdf
https://etd.uum.edu.my/3512/7/s90954.pdf
https://etd.uum.edu.my/3512/
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spelling my.uum.etd.35122022-04-10T06:20:14Z https://etd.uum.edu.my/3512/ Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market Alreyami, Saleh Ahmed Mohammed HG Finance The impact of monitoring mechanisms on financial reporting continues to be a topic of debate among academics, regulators and practitioners. This study focuses on whether internal and external monitoring mechanisms are related to financial reporting credibility. The study seeks to answer the main research question-to what extent are board of directors and audit committee characteristics, disclosure of internal control weaknesses, audit quality and institutional and bank monitoring associated with financial statement credibility. The study also examines whether some control mechanisms substitute or complement other control mechanisms. Hence, this study also attempts to answer the research question - to what extent board of directors, audit committee characteristics and audit quality influence the disclosure of internal control weaknesses. This study utilized a pooled sample of Saudi listed companies in the years 2007 and 2008. Two proxies of earnings informativeness are used to measure the credibility of reported earnings, namely (i) volatility of stock returns during the earnings announcement period and (ii) announcement period cumulative excess returns. The findings support the hypotheses on the association between board independency, audit quality, internal control system, and institutional ownership and earnings informativenss. The finding fails to support a direct impact of audit committee independence on earnings informativeness. However, the result shows that audit committee independence has significant impact on the disclosure of internal control system weaknesses and the disclosure of internal control system weaknesses has significant impact on earnings informativeness. This implies the indirect effects of audit committee independence on the credibility of reported earnings, consistent with the explanation that controls are complementary. The study extends the limited literature on earnings informativeness in Saudi Arabia, and assists the regulators in understanding the effects of monitoring mechanisms on the credibility of financial statement. 2012-10 Thesis NonPeerReviewed text en https://etd.uum.edu.my/3512/1/s90954.pdf text en https://etd.uum.edu.my/3512/7/s90954.pdf Alreyami, Saleh Ahmed Mohammed (2012) Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market. PhD. thesis, Universiti Utara Malaysia.
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Electronic Theses
url_provider http://etd.uum.edu.my/
language English
English
topic HG Finance
spellingShingle HG Finance
Alreyami, Saleh Ahmed Mohammed
Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market
description The impact of monitoring mechanisms on financial reporting continues to be a topic of debate among academics, regulators and practitioners. This study focuses on whether internal and external monitoring mechanisms are related to financial reporting credibility. The study seeks to answer the main research question-to what extent are board of directors and audit committee characteristics, disclosure of internal control weaknesses, audit quality and institutional and bank monitoring associated with financial statement credibility. The study also examines whether some control mechanisms substitute or complement other control mechanisms. Hence, this study also attempts to answer the research question - to what extent board of directors, audit committee characteristics and audit quality influence the disclosure of internal control weaknesses. This study utilized a pooled sample of Saudi listed companies in the years 2007 and 2008. Two proxies of earnings informativeness are used to measure the credibility of reported earnings, namely (i) volatility of stock returns during the earnings announcement period and (ii) announcement period cumulative excess returns. The findings support the hypotheses on the association between board independency, audit quality, internal control system, and institutional ownership and earnings informativenss. The finding fails to support a direct impact of audit committee independence on earnings informativeness. However, the result shows that audit committee independence has significant impact on the disclosure of internal control system weaknesses and the disclosure of internal control system weaknesses has significant impact on earnings informativeness. This implies the indirect effects of audit committee independence on the credibility of reported earnings, consistent with the explanation that controls are complementary. The study extends the limited literature on earnings informativeness in Saudi Arabia, and assists the regulators in understanding the effects of monitoring mechanisms on the credibility of financial statement.
format Thesis
author Alreyami, Saleh Ahmed Mohammed
author_facet Alreyami, Saleh Ahmed Mohammed
author_sort Alreyami, Saleh Ahmed Mohammed
title Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market
title_short Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market
title_full Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market
title_fullStr Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market
title_full_unstemmed Monitoring Mechanisms and Earnings Informativeness in the Saudi Stock Market
title_sort monitoring mechanisms and earnings informativeness in the saudi stock market
publishDate 2012
url https://etd.uum.edu.my/3512/1/s90954.pdf
https://etd.uum.edu.my/3512/7/s90954.pdf
https://etd.uum.edu.my/3512/
_version_ 1731228140510904320
score 13.211869

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