ISSN: 2222-6990
Open access
This study examines the effect of ownership structure on the quality of financial reporting. It examines ownership concentration and individual investors both foreign and local. Ownership concentration endogeneity, company age, a log of total sales and industry affiliation are controlled for in the models. Data were collected from 68 annual reports of companies listed on the Amman Stock Exchange for a sample period from 2005 to 2015. The Hausman test of ownership concentration endogeneity was performed for both models. The results from the first model show that ownership concentration has no effect on the quality of financial reporting. While, individual foreign ownership, company age, a log of total sales and industry affiliation have a positive significant effect on quality of financial reporting. Also, the second model showed a consistent result of the ownership concentration effect on quality of financial reporting. While, individual local ownership, company age, a log of total sales and industry affiliation have a positive significant effect on the quality of financial reporting. The results support the agency theory in the Jordanian context that higher ownership concentration reduces the quality of financial reporting. Moreover, the study adds to the limited literature in Jordan that highlights the endogeneity problem of ownership concentration. The results are useful to policymakers and shareholders to improve the quality of financial reporting in the Jordanian market.
Afify, H. A. E. (2009). Determinants of audit report lag: Does implementing corporate governance have any impact? Empirical evidence from Egypt, Journal of Applied Accounting Research, 10(1), 56-86.
Agboola, A. A., & Salawu, M. K. (2012). The Determinants of Internet Financial Reporting: Empirical Evidence from Nigeria, Research Journal of Finance and Accounting, 3(11), 95-105.
Ahmed, K., & Nicholls, D. (1994). The impact of non-financial company characteristics on mandatory disclosure compliance in developing countries: The case of Bangladesh, The international journal of accounting, 29(1), 62-77.
Ajinkya, B., Bhojraj, S., & Sengupta, Partha. (2005). The Association between Outside Directors, Institutional Investors and the Properties of Management Earnings Forecasts, Journal of Accounting Research, 43(3), 343-376.
Al Daoud, K. A., Ismail, K. N. I. K., & Lode, N. A. (2014). The Timeliness of Financial Reporting among Jordanian Companies: Do Company and Board Characteristics, and Audit Opinion Matter?, Asian Social Science, 10(13), 191-201.
AL- Shwiyat, Z. M. M. (2013). Affecting Factors on The Timing of the Issuance of Annual Financial Reports “Empirical Study on the Jordanian Public Shareholding Companies”, European Scientific Journal, 9(22), 407-423.
Al_Sufy, F. J., Almbaideen, H. I. M., Al_abbadi, H. M., & Makhlouf, M. H. (2013). Corporate Governance and Its Impact on the Quality of Accounting Information in the Industrial Community Shareholding Companies Listed in Amman Financial Market- Jordan, International Journal of Humanities and Social Science, 3(5), 184-195.
Alsmady, A. A., Mohd-Saleh, N., & Ibrahim, I. (2013). Corporate Governance Mechanisms, Privatization Method and the Performance of Privatized Companies in Jordan, Asian Journal of Accounting and Governance, 4, 31-50.
Alsmady, A. A., Mohd-Saleh, N., Ibrahim, I., & Rahman, N. N. A. (2014). The Performance of Public Listed Companies and Privatized Government Linked Companies: A Case of Jordanian Market, Journal of Contemporary Issues and Thought, 4, 58-76.
AL-Tahat, S. S. Y. (2015). Company Attributes and the Timeliness of Interim Financial Reporting in Jordan, International Journal of Application or Innovation in Engineering & Management, 4(3), 6-16.
AL-Tahat, S. S. Y. (2015). Timeliness of Audited Financial Reports of Jordanian Listed Companies, International Journal of Management, 3(2), 39-47.
ASE. (2017). Amman Stock Exchange, http://www.ase.com.jo (12 February 2018).
Ashton, R. H., Graul, P. R., & Newton, J. D. (1989). Audit Delay and the Timeliness of Corporate Reporting, Contemporary Accounting Research, 5(2), 657-673.
Atiase, R. K., Bamber, L. S., & Tse, S. (1989). Timeliness of Financial Reporting, the Firm Size Effect, and Stock Price Reactions to Annual Earnings Announcements, Contemporary Accounting Research 5(2), 526-552.
Babyak, M. A. (2004). What You See May Not Be What You Get: A Brief, Nontechnical Introduction to Overfitting in Regression-Type Models, Psychosomatic Medicine, 66(3), 411-421.
Barako, D. G. (2007). Determinants of voluntary disclosures in Kenyan companies annual reports, African Journal of Business Management, 1(5), 113-128.
Basuony, M. A. K., & Mohamed, E. K. A. (2014). Board composition, Ownership Concentration, and Voluntary Internet Disclosure by MSM-Listed Companies, Corporate Board: Role, Duties & Composition, 10(1), 60-70.
Beekes, W., & Brown, P. R. (2006). Do Better-Governed Australian Firms Make More Informative Disclosures?, Journal of Business Finance & Accounting,33(3-4), 422-450.
Ben-Amar, W., & Boujenoui, A. (2007). Factors Explaining Corporate Governance Disclosure Quality: Canadian evidence, Working Paper: Illinois International Accounting Symposium, (1-39).
Boone, A. L., & White, J. T. (2015). The effect of institutional ownership on firm transparency and information production, Journal of Financial Economics, 117(3), 508-533.
Brown, J., Falaschetti, D., & Orlando, M. (2
In-Text Citation: (Alsmady, 2018)
To Cite this Article: Alsmady, A. A. (2018). Ownership Structure and its Endogeneity Effect on the Quality of Financial Reporting. International Journal of Academic Research in Business and Social Sciences, 8(3), 527–542.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode