Purpose This study aims to investigate whether board gender diversity (BGD) influences environmental, social and governance (ESG) performance, while also examining the moderating role of institutional ownership on this relationship. Design/methodology/approach A sample of 504 firm-year observations was obtained across 63 nonfinancial firms publicly traded within the Egyptian Exchange during 2015–2022. The empirical analysis was performed employing Pooled Ordinary Least Squares, while two-stage least squares regression was applied for alleviating possible issues of endogeneity. Findings The study findings demonstrate a significant and positive effect of women in boardrooms on ESG outcomes. Furthermore, institutional ownership weakens this positive effect as a moderating variable. Remarkably, the COVID-19 outbreak led to enhanced ESG performance. The robustness of the study results is further reinforced by additional tests using different metrics for the key variables. Moreover, the findings reinforce critical mass theory. Originality/value To the best of the authors’ knowledge, it is the first empirical analysis to investigate how institutional ownership moderates the relationship between women directors and ESG ratings in Egypt and the Middle East and North Africa (MENA) region. It also represents the first empirical attempt to examine COVID-19 as a moderating variable in this relationship and to apply the perspective of critical mass theory to explore the BGD–ESG nexus in Egypt.
Purpose Climate change risk is among the severe complexities that human society is facing, which also poses serious challenges to enterprise operations. This study aims to assess the extent of military culture’s imprint by providing empirical evidence on whether CEOs’ military experience improves or reduces firms’ climate-change risk. Design/methodology/approach This study employs pooled ordinary least squares (OLS) to investigate the relationship between CEOs’ military experience and firm-level climate change exposure. The study sample comprises mainland A-share listed enterprises from 2007 to 2022. Findings The outcomes of the given study provide evidence that CEOs with military experience mitigate the firm-level climate change exposure. Board gender diversity strengthens the nexus between CEO military experience and firm-level climate-change exposure. Furthermore, the channel analysis findings indicate that external monitoring partially amplifies the negative relationship between CEO military experience and firm-level climate change exposure. The cross-sectional analysis results indicate that the underlying nexus is more pronounced among enterprises with low competition intensity, political connections, located in low-carbon city pilot areas, and without CEO duality. Practical implications Overall, these outcomes underscore the need for accurate assessment of climate change exposure to inform strategic decisions. This study has several implications for corporations, governments, policymakers and other regulatory authorities. Originality/value The study contributes to the literature by identifying CEO military experience as a novel driver of firm-level climate risk, an area that has received scant attention in prior research. This study provides empirical support for the upper-echelon theory and the resource-based view by documenting how military background CEOs shape corporate strategic decisions in contexts of external environmental uncertainty. Furthermore, enrich the literature on the resource dependence theory by exploring the moderating role of board gender diversity.
Purpose Over recent decades, an increasing number of studies have examined the intersections among digitalization, auditing and corporate performance. However, an integrated and systematic analysis of the literature simultaneously addressing digitalization, auditing and performance remains scarce. This study aims to fill this gap by proposing a bibliometric review of the existing literature and identifying the main research themes likely to advance the field. Design/methodology/approach This research was conducted in accordance with a rigorous dual methodological protocol based on the SPAR-4-SLR framework (Scientific Procedures and Rationales for Systematic Literature Reviews) and the Preferred Reporting Items for Systematic Reviews and Meta-Analyses reporting guidelines, ensuring transparency, reproducibility and full traceability of the literature selection process. Bibliometric methods were then used to analyze the scientific evolution and to map the intellectual structure of research on digitalization, auditing and performance over the period 2016–2025. The bibliographic data were extracted from the Scopus and Web of Science databases, which provided comprehensive and representative coverage of the field under study. Findings The results highlight the main trends and dynamics of research related to digitalization, auditing and performance. Three major thematic clusters emerge: the conceptual foundations of digital transformation and its consequences for auditing practices; organizational capabilities, audit quality and performance; and the integration of digital technologies and management practices. These findings help structure the field and outline future research avenues, particularly those related to emerging technologies, organizational transformations and managerial strategies. Research limitations/implications By identifying dominant, emerging and fragmented research streams, this study structures the literature on digitalization, auditing and performance and thus contributes to a better understanding of the intellectual dynamics of the field. It also highlights key managerial and regulatory implications, emphasizing the need to strengthen auditors’ digital skills, integrate digitalization into sustainable performance strategies and adapt regulatory frameworks to digital transformation. Originality/value This study contributes to the literature by proposing an in-depth bibliometric mapping of research on digitalization, auditing and performance. It systematically identifies and analyzes the main thematic clusters while highlighting persistent theoretical and empirical gaps.
Purpose This study aims to investigate the relationship between corporate social responsibility (CSR) engagement and tax avoidance, exploring whether firms engage in "organized hypocrisy" - leveraging CSR initiatives to maintain legitimacy while simultaneously engaging in aggressive tax planning. The study further examines the moderating effects of institutional environments and industry characteristics.Design/methodology/approach Using a panel data set of firms from 12 countries over the period 2006-2019, this study applies fixed-effects regression models to assess the relationship between CSR engagement and tax avoidance. Multiple robustness tests, including alternative measures of CSR and tax avoidance as well as two-stage least squares (2SLS) estimation, ensure the reliability of results.Findings The authors find that higher CSR engagement is associated with greater tax avoidance. The relationship is shaped by institutional and industry contexts: it is stronger for firms in liberal market economies and in environmentally sensitive industries. These findings remain robust to alternative measures of CSR and tax avoidance and to tests including or excluding US firms.Practical implications The findings have implications for policymakers, regulators and standard setters, highlighting the need to enhance transparency in CSR disclosures and corporate tax policies. Strengthening regulatory frameworks may help curb opportunistic CSR practices used to justify aggressive tax planning.Social implications The study underscores the potential societal consequences of firms using CSR engagement to obscure tax avoidance strategies. By diverting financial resources from public funds to shareholders, such practices may undermine government revenues needed for essential public services and infrastructure development.Originality/value This study contributes novel empirical evidence to the literature by demonstrating how firms simultaneously engage in CSR and tax avoidance, extending the concept of organized hypocrisy to corporate tax policy. By incorporating cross-country data, it provides a broader institutional perspective on the relationship between CSR and tax behavior.
PurposeThis study aims to examine the existing literature on the use of artificial intelligence (AI) in auditing in terms of its diversity, evolution over time, and dynamics. Design/methodology/approachThe authors integrate the systematic literature review, the preferred reporting items for the systematic reviews and meta-analyses framework, scientometric analysis, and topic modeling within socio-technical systems theory. The corpus comprises 236 peer-reviewed papers from the Scopus database, published between 2014 and 2025, and ranked by the Association of Business Schools and Australian Business Deans Council. FindingsThe authors identify nine latent topics: (1) big data analytics, (2) data mining, (3) robotic process automation, (4) machine learning, (5) natural language processing, (6) complex AI technologies, (7) legal and regulatory environment, (8) auditor’s skills and knowledge, and (9) audit quality. Topics 1–6 represent the technical subsystem, whereas Topics 7, 8, and 9 characterize the joint optimization of social and technical subsystems. Research limitations/implicationsThis study acknowledges limitations related to its reliance on the Scopus database, the selected search terms, the time period, and the inclusion of only peer-reviewed papers. Practical implicationsThe study offers significant benefits for regulators, standard setters, practitioners, and accounting educators, fostering the efficient and effective use of AI in auditing. Social implicationsThe findings suggest that AI technologies are reshaping auditors’ roles and requiring new competencies and robust ethical and regulatory frameworks. Originality/valueThe findings emphasize the necessity of joint optimization of social and technical subsystems through a novel approach to identifying research gaps in AI-based auditing.
Purpose This study aims to scrutinize whether the corporate board characteristics, specifically board size (BS), gender diversity (GD), board independence (BI) and board activity (BA), influence financial inclusion disclosure (FID) in South African banks. It further investigates the moderating role of audit committee activity (ACA) in strengthening these relationships within the mandatory integrated reporting (IR) environment. Design/methodology/approach Using a sample of the largest South African banks between 2018 and 2024, the study uses manual content analysis to construct a novel 40-item FID Index. Multiple regression models are used to test both the direct effects of board characteristics and the moderating effects of ACA. Findings The results reveal that BS is negatively and significantly associated with FID. GD shows a positive but insignificant relationship with FID, while BA is positively and significantly associated with FID. Importantly, ACA has a strong positive effect and moderates key relationships, amplifying the influence of board GD and converting the adverse effect of BI into a positive driver of disclosure. Research limitations/implications The study is limited to South Africa and has a relatively small sample. Future research could extend to cross-country comparisons in emerging markets, incorporate additional governance variables and examine broader institutional determinants of FID. Practical implications The findings provide actionable insights for regulators, policymakers and bank managers. Strengthening ACA and fostering larger, more gender-diverse boards can enhance transparency in disclosure, bolster stakeholder trust and align reporting with national development priorities. Originality/value To the best of the authors’ knowledge, this study is the first to comprehensively examine board characteristics and ACA as determinants of FID. It provides a novel disclosure index, integrates multiple governance dimensions and draws on evidence from South Africa’s unique IR context. The findings advance the governance and disclosure literature, highlighting the transformative role of audit committees and offering replicable methodological insights.
Purpose This study aims to examine whether investor sentiment affects two key valuation inputs, expected earnings growth rate and discount rate, and whether it moderates the relationship between accounting information and firm value. Design/methodology/approach The study analyzes firms from Brazil, Chile, Mexico and Peru between 2004 and 2023. Expected earnings growth relies on analysts’ earnings per share forecasts, the discount rate on the implied cost of capital and investor sentiment is measured at the firm level. Findings The findings show that investor sentiment meaningfully alters equity valuations by influencing expected earnings growth and the discount rate, generating deviations from intrinsic value. Sentiment also changes how accounting information is incorporated into prices. Its economic impact is sizable, exceeding that of traditional risk factors such as beta. Research limitations/implications The sentiment measure may not fully capture investors’ beliefs, and results may not generalize to markets with stronger institutions. Still, the findings imply that policymakers should reduce informational frictions that amplify sentiment-driven mispricing, while managers should monitor sentiment as an additional factor shaping market reactions to fundamentals. Originality/value By integrating behavioral finance predictions with the residual-income framework, the paper shows that sentiment-driven expectations can rival traditional risk-based determinants in shaping valuation inputs. This provides new evidence for the Latin American context, where political instability, regulatory heterogeneity, and persistent information asymmetries heighten investors’ reliance on heuristics. In such environments, sentiment-induced shifts in expectations more readily propagate into growth forecasts and discount rates, helping explain the stronger firm-level sentiment effects observed in the sample.
Purpose This paper aims to examine the associations between inflation expectations and earnings management, accrual-based and real activities manipulation, using a sample of firms listed and incorporated in euro area countries. Design/methodology/approach Drawing on survey-based measures of inflation expectations, along with the models developed by Kothari et al. (2005) and Roychowdhury (2006) to estimate accrual and real earnings management, and a sample spanning from 2005Q1 – the year when most euro area countries adopted IFRS – to 2023Q4, the authors perform fixed-effects regressions. Findings The authors find that higher firms’ inflation expectations are associated with greater accrual-based earnings management and real earnings management through overproduction, whereas sales manipulation exhibits a negative association. In addition, in recessionary periods, when there is a broad decline in economic activity, these relationships become more pronounced, with upward accrual-based earnings management and real earnings management through sales manipulation being particularly evident. Finally, when the effective lower bound (ELB) is binding, the positive relation between earnings management and inflation expectations generally weakens. Replicating the analysis using consumers’ inflation expectations as the primary explanatory variable, the authors further find that downward accrual-based earnings management and overproduction are more prominent during recessions, whereas firms appear to rely on sales manipulation when the ELB is being approached. Originality/value To the best of the authors’ knowledge, this is the first study to investigate the associations between inflation expectations and earnings management. The results of this study may have implications mainly for investors, auditors and central banks.
PurposeThe purpose of this paper is to present a comprehensive systematic literature review of 78 empirical studies published from 2012 to 2025 on the determinants of integrated reporting (IR). This paper synthesises a decade of evidence to identify, classify and critically evaluate the factors influencing IR adoption and report quality. Design/methodology/approachA systematic literature review methodology is used. Relevant studies were identified through a multi-stage search of Scopus and Google Scholar, applying explicit inclusion criteria (peer-reviewed empirical studies examining IR as a dependent variable). FindingsCorporate governance mechanisms (especially board characteristics) and multi-factor drivers emerge as prominent determinants. The literature exhibits imbalances, including a theoretical reliance on agency and stakeholder theory, an overuse of disclosure indices that emphasise quantity and a geographical concentration in advanced economies. Originality/valueThis review provides the first up-to-date synthesis of empirical evidence on IR determinants covering the full trajectory of the field’s development. This study offers a rigorous diagnosis of the literature’s theoretical, methodological and contextual gaps and advances a detailed research agenda. The findings of this study deliver actionable insights for researchers by pinpointing areas that require deeper investigation (e.g. new theoretical lenses, improved measurement of IR quality, developing-country and industry-specific analyses). Practitioners and regulators can also benefit from the consolidated evidence on which governance practices and contextual factors most strongly drive high-quality IR, helping to enhance IR implementation and policy.
Purpose This study aims to examine the stock market reactions to environmental, social or governance (ESG) decoupling and corporate governance in UK nonfinancial firms. The authors investigate how social decoupling and greenwashing affect market capitalization (MC). They also analyse the impact of key governance mechanisms, including board diversity, institutional ownership and corporate social responsibility (CSR) committees. Design/methodology/approach Our study analyses a data set of 1,764 firm-year observations of publicly listed nonfinancial firms in Financial Times Stock Exchange (FTSE) All-Share between 2014 and 2024. The hypotheses are tested using fixed-effect regression model. Findings The authors find a significant negative relationship between social decoupling and MC. In contrast, environmental greenwashing has no significant effect on MC. Regarding governance, institutional ownership and board gender diversity are positively valued by investors. However, the presence of a CSR committee is negatively associated with MC. This indicates that CSR committee could be perceived as a symbolic gesture rather than a substantive commitment to oversight. Our main findings remain constant when using Tobin’s Q as an alternative measure for MC. Research limitations/implications This study uses data from nonfinancial sector in FTSE All-Share in UK, which may limit the generalizability of the findings to other industries or countries. Practical implications The findings provide a warning to corporate managers against the “talk vs walk” strategy on social issues as it could destroy their firms’ value. For investors and regulators, this study highlights the need for standardized, verifiable disclosures to distinguish genuine environmental performance from superficial claims. Originality/value This study demonstrates how the UK stock market responds to different forms of symbolic ESG action. The results are a caution to managers that social decoupling and symbolic governance structures such as standalone CSR committees may undermine firm market value. For investors and regulators, These results highlight the importance of scrutinizing the substance of ESG commitments over superficial claims.
Purpose The purpose of this study is to explore international students’ perceptions of FinTech adoption and its implications for financial literacy interventions in the UK. Design/methodology/approach A small-scale exploratory and interpretive research design was adopted, using semi-structured interviews with international postgraduate students who had varying levels of financial knowledge and were encountering UK financial services for the first time. Findings Limited access to financial information and support constrains students’ ability to manage personal finances and reduces their confidence in using digital financial services. Interview findings show that even financially literate students reported reduced trust in the use of banking applications in the presence of information gaps. However, FinTech services were perceived as an accessible alternative to mitigate such constraints during a student’s transition into the UK financial system. Ultimately, the findings of this study establish a case for the importance and value of tailored financial literacy programmes for international students in the UK. Practical implications Providers of financial literacy education should integrate FinTech functionalities into short-term technology-enabled financial literacy programmes. Basic financial literacy concepts can be introduced through direct engagement with FinTech applications, allowing participants to revisit and reinforce learning during and after the FinTech intervention. Originality/value This study identifies FinTech as a financial coping resource during students’ financial transition and examines how its personalised features shape their financial management practices. The findings further suggest that FinTech-enabled interventions may strengthen students’ financial capability during the transition period.
Purpose The purpose of this study is to investigate the metaverse environment's impact on fraud detection in financial statements.Design/methodology/approach This research used a survey-based study on Iran's academics, accountants, auditors and financial professionals. Professors were included because of their academic expertise in accounting, fraud and digital innovations, offering informed insights into the intersection of metaverse technologies and financial reporting. In addition, to enhance the quality of the research, an English-language questionnaire was prepared and distributed online to professors and experts outside the country. The findings from these international respondents were included alongside the domestic findings. The research timeframe was set for 2024. Data were collected through questionnaires. A total of 392 responses were received from within Iran, and 105 responses were received from abroad. The study is grounded in the Theory of Social Presence (TSP), which posits that enhanced virtual presence fosters more effective communication and collaboration factors relevant to fraud detection.Findings The metaverse was found to have a significant effect on the detection of fraud in financial statements. The results of this study support the theoretical model, demonstrating that immersive technologies improve stakeholder interaction, data analysis and the transparency of financial reporting.Originality/value These results can be helpful for financial report preparers and users, suggesting that the metaverse environment may be used in preparing financial reports, enhancing the usefulness of financial reporting. It can also aid in fraud detection in financial statements and reduce agency costs. The contribution of this study lies in its empirical investigation of the impact of the metaverse on financial reporting and fraud detection, an area that has received limited scholarly attention, particularly in applied settings. The findings have important practical implications for both industry and policymakers, as they provide evidence that the strategic adoption of metaverse technologies can enhance fraud detection capabilities, reduce agency costs and support the development of more transparent and technologically adaptive financial reporting systems.
Purpose - This study aims to investigate the strategic determinants motivating central banks to transition from central bank digital currency (CBDC) research to real-world implementation. Design/methodology/approach - The authors use an ordered logit model of 77 countries (2013-2023) and a cross-sectional analysis (2023) that focuses on the impact of the cryptocurrency adoption index. A principal component analysis is also used to construct the institutional quality index and results are validated through ordered probit and lagged models. Findings - Our results identify a "Stability Paradox" in CBDC evolution. While banking stability alone may delay innovation, its interaction with high-quality governance jointly shapes the conditions for advanced implementation. Furthermore, the authors reveal a "cryptocurrency threshold effect" in 2023: private digital asset penetration serves as a threshold-driven catalyst, consistent with a competitive response mechanism once a critical cryptocurrency adoption level is reached. Originality/value - This paper contributes to the literature by validating the Stability Paradox within an ordinal framework that captures the sequential progression of CBDC adoption stages. It shows that CBDC advancement is driven by the interaction between institutional quality and banking system resilience. Unlike prior studies focusing on linear determinants, the authors propose a triple catalyst model combining governance quality, financial stability and external competitive pressure. The authors further identify a cryptocurrency threshold effect in 2023, suggesting that rising private digital asset activity is associated with a higher probability of advanced CBDC adoption, consistent with a strategic competitive response by central banks.
Purpose This study aims to investigate how corporate governance (CG) mechanisms, particularly board characteristics, influence carbon emissions disclosure (CED) and examines the moderating role of the sustainability committee (SC) in a European context shaped by intensifying regulatory and stakeholder demands for transparent climate-related reporting.Design/methodology/approach Using a balanced panel of 513 STOXX Europe 600 non-financial firms across 17 countries (2015-2023), the study uses panel regression with fixed effects. Endogeneity and heterogeneity are addressed through dynamic system generalized method of moment, lagged governance variables, regulatory controls and industry sensitivity analyses.Findings Board independence, gender diversity, meeting frequency and size are positively associated with CED, while chief executive officer (CEO) duality is negatively related. SCs are positively associated with higher CED and moderate board effects: they strengthen the impact of gender diversity, board activity and size, attenuate CEO duality and substitute for the monitoring role of independence. Results are robust across alternative specifications, regulatory settings and industry classifications.Practical implications SCs should be viewed as substantive governance mechanisms rather than symbolic structures. Firms can enhance the credibility and quality of CED by embedding sustainability oversight within board governance, particularly alongside diverse and active boards. For policymakers, regulatory initiatives and internal governance operate as complementary drivers of disclosure quality.Originality/value This study contributes to the literature by demonstrating that CED is shaped by configurations of governance mechanisms rather than isolated board attributes, and by highlighting the dual substitutive and complementary role of SCs. It advances theoretical understanding of governance-disclosure dynamics in a highly regulated European setting.
Purpose External public auditing faces increasing challenges due to the growing volume of information and rising demands for efficiency and accountability. Artificial intelligence (AI) offers significant potential benefits, such as task automation, big data analysis and risk detection, yet its adoption in the public sector remains limited. This study examines how external public auditors perceive the benefits of AI and how these perceptions, together with factors from the unified theory of acceptance and use of technology (UTAUT) model - effort expectancy, performance expectancy and social influence - affect their intention to use AI. Gender is considered a moderating variable.Design/methodology/approach A survey was conducted among 219 auditors from Regional Audit Institutions affiliated with the European Organisation of Regional External Public Finance Audit Institutions. Data were analysed using partial least squares structural equation modelling.Findings The perception of potential benefits emerged as the main determinant of intention to use AI. Performance expectancy only influenced intention indirectly through perceived benefits. Effort expectancy and social influence also had significant effects, with notable gender differences: instrumental factors predominated among men, while social acceptance played a greater role for women.Originality/value This research provides original empirical evidence on AI adoption intentions in the context of external public auditing. It extends the UTAUT model by incorporating perceived benefits as a key variable and offers recommendations to encourage AI adoption through strategies sensitive to auditors' perceptions and characteristics.
Purpose This paper aims to examine and compare the quality of mandatory joint audits among six joint audit pair types within and across listed nonfinancial companies in the European Union (France) and the MENA region (Morocco and Tunisia). Design/methodology/approach A multivariate regression model examines variations in audit quality across six auditor-pair categories using a sample of 440 nonfinancial firms from 2014 to 2023, yielding 4,400 firm-year observations: 3,590 from France, 510 from Morocco and 300 from Tunisia. Findings The analysis indicates that there are no statistically significant differences in the quality of mandatory joint audits between most joint audit pair categories within and across countries. These results indicate that mandatory joint auditing may reduce variation in audit quality across pairs, both within and across countries. An additional analysis of the effect of audited firm size shows consistent outcomes for small, medium and especially larger firms. In addition, including at least one industry-specialized auditor in most joint audit pairs does not significantly affect audit quality. Practical implications This study provides valuable insights for regulators, policymakers, audit firms and companies by offering clear evidence on how auditor-pair composition, firm size and industry specialization affect the quality of mandatory joint audits within and across countries, thereby supporting the development of effective regulations in both developed and developing markets. Originality/value To the best of the authors’ knowledge, this study is among the first to examine and compare the quality of mandatory joint audits across joint audit pairs in developed and emerging economies, using a six-category pairwise classification, recent data and analysis of firm size and industry specialization.
Purpose This study aims to examine whether distressed firms that file for bankruptcy are more likely to restate their financial statements than those that reorganize successfully outside of bankruptcy. It explores whether restatements serve as a signal of impending failure and how investors react to such disclosures. Design/methodology/approach The analysis distinguishes between two groups of distressed firms: those entering formal bankruptcy proceedings and those that recover without filing. Comparative tests assess restatement behavior across these groups, with additional focus on the role of earnings management. Market reactions to restatements are also evaluated. Findings The findings indicate that pre-bankrupt distressed firms are significantly more likely to restate their financial statements than distressed firms that avoid bankruptcy. Firms engaging in earnings management are more prone to restatements regardless of bankruptcy status. Investors react more negatively to restatements by pre-bankrupt firms and to those issued by firms perceived to manipulate earnings, independent of their eventual survival. Originality/value By differentiating between bankrupt and non-bankrupt distressed firms, this study advances prior research that treats distressed firms as a homogeneous category. It highlights the signaling value of restatements in predicting failure and underscores the importance of investor perceptions of earnings management in shaping market responses.
Purpose This study aims to address a longstanding puzzle in the financial reporting literature concerning why the traditionally negative signal conveyed by a non-clean audit opinion does not consistently result in delayed financial disclosure. Specifically, the authors examine how a firm's underlying earnings quality (EQ) influences its strategic disclosure timing decisions in response to such adverse audit signals.Design/methodology/approach Using a panel data set of 130 Egyptian non-financial firms over the 2014-2022 period, comprising 1,059 firm-year observations, the authors use a fixed-effects (FE) panel regression model. The robustness of the findings is further validated through subsample analyses and alternative econometric specifications, including the system generalized method of moments (GMM) estimator, to mitigate potential endogeneity concerns.Findings Although the direct effect of a non-clean audit opinion is not statistically significant, the significant negative interaction effect indicates the presence of two contrasting strategic disclosure responses. Specifically, firms with low-EQ significantly delay financial reporting following the receipt of a non-clean audit opinion, whereas high-EQ firms accelerate their disclosure announcements, consistent with a credible signaling strategy aimed at proactively demonstrating financial resilience. Furthermore, this interaction effect is conditional on the severity of the audit modification and is particularly pronounced among firms characterized by lower external audit quality and larger organizational size.Practical implications A delayed announcement of a non-clean audit opinion constitutes a dual negative signal, reflecting not only the presence of an adverse audit outcome but also deficiencies in the firm's underlying information quality. In contrast, the timely disclosure of unfavorable audit news may function as a credible signal of organizational resilience, transparency and confidence in the firm's underlying financial reporting quality.Originality/value To the best of the authors' knowledge, this study is among the first to document the significant moderating role of EQ in shaping the relationship between audit opinion modifications and earnings announcement delays. In doing so, it offers a theoretically grounded explanation for a longstanding puzzle in the disclosure literature by demonstrating the interactive role of EQ through an extension of dynamic capabilities theory. The findings further suggest that high earnings quality functions as a critical operational buffer, enabling firms to adopt a credible and timely disclosure strategy even when confronted with adverse audit outcomes.
Purpose This study aims to examine whether the implementation of the corporate governance code (CGC) improved earnings quality in Kuwait.Design/methodology/approach Using non-financial firms listed on the Kuwait Stock Exchange from 2000 to 2024, this study measures accrual-based earnings management (EM) through discretionary accrual volatility estimated using a modified Dechow-Dichev model.Findings Firm fixed-effects regressions show a significant decline in EM following CGC implementation. A dynamic event-study specification reveals no pre-reform trends and a persistent post-reform reduction, while a placebo reform test yields null effects. The findings are robust to alternative discretionary accrual proxies, heterogeneity analyses using auditor type and firm size and entropy balancing.Practical implications The results suggest that the CGC reduces EM. Therefore, regulators and policymakers should strengthen corporate governance (CG) practices to enhance financial reporting quality and investor confidence.Originality/value This study contributes to the limited literature on CG and EM by providing rare long-horizon evidence from Kuwait, an underexplored emerging market. Using a 24-year data set, it evaluates the effectiveness of a comprehensive governance mandate in a context where EM is often argued to be more prevalent.
