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A study of mediating and moderating effects on the relationship between audit quality and integrated reporting quality among Jordanian firms

Author

Listed:
  • Malik Abu Afifa
  • Isam Saleh
  • Rahaf Abu Al-Nadi

Abstract

Purpose - The purpose of this research is to investigate the link between external audit quality and integrated reporting (IR) quality in the Jordanian market, a developing market. Furthermore, the research model considers the mediating effect of earnings management practices and the moderating effect of board gender diversity. As a result, it intends to provide further empirical evidence in this area. Design/methodology/approach - This research investigates its model using data from Jordanian services companies listed on the Amman Stock Exchange (ASE) during the period 2013–2022. With 430 company-year observations, the current research’s sample includes all companies in the research population for which complete data were available during the period under investigation. Data relevant to the research setting were obtained from annual disclosures and the ASE's database. Findings - The findings of this research show that audit firm size and audit firm specialty have a positive influence on IR quality, but audit firm tenure does not. External audit quality (as proxied by the size, specialty and turnover of the audit firm) had a negative impact on earnings management practices, while earnings management practices had a negative impact on IR quality. Additionally, the findings reveal that earnings management practices completely mediate the relationship between two external audit quality proxies (audit firm size and audit firm specialty) and IR quality. Furthermore, in terms of the moderating impact of board gender diversity, it is obvious that board gender diversity favorably moderates the relationships between all external audit quality proxies and IR quality. Originality/value - Using agency theory and stakeholder theory, this investigation fills a gap in previous literature by adding scientific explanations and empirical evidence from the Jordanian market, a developing market, in the context of the impact of audit quality on IR quality, mediated by earnings management and moderated by board gender diversity.

Suggested Citation

  • Malik Abu Afifa & Isam Saleh & Rahaf Abu Al-Nadi, 2024. "A study of mediating and moderating effects on the relationship between audit quality and integrated reporting quality among Jordanian firms," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 33(2), pages 223-249, September.
  • Handle: RePEc:eme:arapps:ara-12-2023-0336
    DOI: 10.1108/ARA-12-2023-0336
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    More about this item

    Keywords

    Agency theory; Stakeholder theory; Audit quality; Integrated reporting; Gender diversity; Earnings management; M41; G40; G41; G32;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • 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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