IDEAS home Printed from https://ideas.repec.org/a/gam/jadmsc/v13y2023i9p206-d1241858.html
   My bibliography  Save this article

Ownership Concentration and Audit Actions

Author

Listed:
  • Hidaya Al Lawati

    (Accounting Department, College of Economics and Political Science, Sultan Qaboos University, P.O. Box 50, Muscat 123, Oman)

  • Zakeya Sanad

    (Accounting, Finance and Banking Department, Ahlia University, Manama P.O. Box 10878, Bahrain)

Abstract

This study presents current evidence on the impact of different corporate ownership types on audit quality in Oman and potentially in other developing countries with similar institutional environments, such as GCC countries. While previous research has primarily focused on overall ownership concentration, this study aims to examine the role of specific shareholder identities and their influence on the demand for audit quality. This research sheds light on the relationship between ownership identities and audit quality of Omani financial companies listed on the Muscat Stock Exchange from 2014 to 2020. This study employs additional analysis to mitigate potential confounding factors and ensure robust results. Additionally, a GMM test establishes the robustness of our findings, alleviating potential endogeneity concerns. The findings highlight the positive impact and significance of bank, government, and foreign ownership in promoting high audit quality. In contrast, ownership by financial institutions (non-banks) and block holder concentrations negatively and significantly impact audit quality. In addition, this study found that family members on boards play positive moderating roles in the relationship between ownership concentration and audit quality. In addition to contributing to the existing literature, this study provides valuable insights for regulatory bodies to consider the role of ownership types in their decision-making processes. Our findings also assist investors in making informed choices and offer a better understanding of how ownership structures influence audit quality for other stakeholders. The implications of this research extend beyond Oman and can be relevant to countries with similar ownership structures and regulatory frameworks.

Suggested Citation

  • Hidaya Al Lawati & Zakeya Sanad, 2023. "Ownership Concentration and Audit Actions," Administrative Sciences, MDPI, vol. 13(9), pages 1-24, September.
    • Handle: RePEc:gam:jadmsc:v:13:y:2023:i:9:p:206-:d:1241858
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2076-3387/13/9/206/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2076-3387/13/9/206/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Olumide A. Olowokure & Muhammad Tanko & Terzungwe Nyor, 2016. "Firm Structural Characteristics and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria," International Business Research, Canadian Center of Science and Education, vol. 9(1), pages 106-122, January.
    2. Khaled Abdulwahab Alzeaideen & Sara Zakaria AL-Rawash, 2018. "The Effect of Ownership Structure and Corporate Debt on Audit Quality: Evidence from Jordan," International Journal of Economics and Financial Issues, Econjournals, vol. 8(3), pages 51-58.
    3. Tarek A Hassan & Stephan Hollander & Laurence van Lent & Ahmed Tahoun, 2019. "Firm-Level Political Risk: Measurement and Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 2135-2202.
    4. Abdalmuttaleb M.A. Musleh Al-Sartawi & Zakeya Sanad, 2019. "Institutional ownership and corporate governance: evidence from Bahrain," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 9(1), pages 101-115.
    5. Alhababsah, Salem, 2019. "Ownership structure and audit quality: An empirical analysis considering ownership types in Jordan," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 35(C), pages 71-84.
    6. Habib, Ahsan & Ranasinghe, Dinithi & Muhammadi, Abdul Haris & Islam, Ainul, 2018. "Political connections, financial reporting and auditing: Survey of the empirical literature," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 31(C), pages 37-51.
    7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    8. Duc Nam Phung & Anil V. Mishra, 2016. "Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 63-98, March.
    9. Pound, John, 1988. "Proxy contests and the efficiency of shareholder oversight," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 237-265, January.
    10. Tripti Nashier & Amitabh Gupta, 2023. "Ownership Concentration and Firm Performance in India," Global Business Review, International Management Institute, vol. 24(2), pages 353-370, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohamad Azwan Md Isa & Norashikin Ismail & Mohd Halim Kadri, 2024. "Sustainability Performance and Corporate Financial Stability of Shariah-Compliant Companies in Malaysia: The Moderating Effects of Ownership Concentration," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(14), pages 28-46, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alhababsah, Salem, 2019. "Ownership structure and audit quality: An empirical analysis considering ownership types in Jordan," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 35(C), pages 71-84.
    2. Abdul Waheed & Qaisar Ali Malik, 2021. "Institutional Ownership Board Characteristics and Firm Performance: A Contingent Theoretical Approach," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 12(2), pages 1-15, April.
    3. Vasanthan Subramaniam & Shaista Wasiuzzaman, 2019. "Corporate diversification and dividend policy: empirical evidence from Malaysia," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 735-758, September.
    4. Sunusi Garba* & Mudzamir Bin Mohamed, 2018. "Ownership Structure and Profitability: The Moderating Effect of Audit Committee Financial Expertise," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 396-401:6.
    5. Stuart L. Gillan & Laura T. Starks, 2002. "Institutional Investors, Corporate Ownership, and Corporate Governance: Global Perspectives," WIDER Working Paper Series DP2002-09, World Institute for Development Economic Research (UNU-WIDER).
    6. McKnight, Phillip J. & Weir, Charlie, 2009. "Agency costs, corporate governance mechanisms and ownership structure in large UK publicly quoted companies: A panel data analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 139-158, May.
    7. Ying Schwarte & Ping He, 2024. "The effects of institutional investors and munificence on board chair orientations," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(4), pages 1049-1077, December.
    8. Saeyoung Chang & Michael Hertzel, 2004. "Equity Ownership and Firm Value: Evidence from Targeted Stock Repurchases," The Financial Review, Eastern Finance Association, vol. 39(3), pages 389-407, August.
    9. Hingorani, Archana & Lehn, Kenneth & Makhija, Anil K., 1997. "Investor behavior in mass privatization: The case of the Czech voucher scheme," Journal of Financial Economics, Elsevier, vol. 44(3), pages 349-396, June.
    10. Börsch-Supan, Axel & Köke, Jens, 2000. "An applied econometricians' view of empirical corporate governance studies," ZEW Discussion Papers 00-17, ZEW - Leibniz Centre for European Economic Research.
    11. Deng, Wenyueyang & Zhang, Zenglian & Guo, Borui, 2024. "Firm-level carbon risk awareness and Green transformation: A research on the motivation and consequences from government regulation and regional development perspective," International Review of Financial Analysis, Elsevier, vol. 91(C).
    12. Driss, Hamdi & Drobetz, Wolfgang & El Ghoul, Sadok & Guedhami, Omrane, 2021. "Institutional investment horizons, corporate governance, and credit ratings: International evidence," Journal of Corporate Finance, Elsevier, vol. 67(C).
    13. Laksmana, Indrarini & Harjoto, Maretno A. & Kim, Hoyoung, 2023. "Managing disclosure of political risk: The case of socially responsible firms," Journal of Business Research, Elsevier, vol. 154(C).
    14. Gregorio Sánchez‐Marín & María Encarnación Lucas‐Pérez & Samuel Baixauli‐Soler & Brian G.M. Main & Antonio Mínguez‐Vera, 2022. "Excess executive compensation and corporate governance in the United Kingdom and Spain: A comparative analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2817-2837, October.
    15. Jan Hanousek & Hoje Jo & Christos Pantzalis & Jung Chul Park, 2023. "A Dilemma of Self-interest vs. Ethical Responsibilities in Political Insider Trading," Journal of Business Ethics, Springer, vol. 187(1), pages 137-167, September.
    16. Nejla Ould Daoud Ellili, 2020. "Environmental, Social, and Governance Disclosure, Ownership Structure and Cost of Capital: Evidence from the UAE," Sustainability, MDPI, vol. 12(18), pages 1-23, September.
    17. María Consuelo Pucheta‐Martínez & Inmaculada Bel‐Oms, 2019. "What have we learnt about board gender diversity as a business strategy? The appointment of board subcommittees," Business Strategy and the Environment, Wiley Blackwell, vol. 28(2), pages 301-315, February.
    18. Surroca Aguilar, Jorge & Tribo Gine, José Antonio, 2009. "Is managerial entrenchment always bad? : a CSR approach," IC3JM - Estudios = Working Papers id-09-01, Instituto Mixto Carlos III - Juan March de Ciencias Sociales (IC3JM).
    19. Yeddou, Nacera & Pourroy, Marc, 2020. "Bank liquidity creation: Does ownership structure matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 116-131.
    20. Hamza Nizar & Taher Hamza & Faten Lakhal, 2024. "How does institutional cross‐ownership affect firm productivity? The importance of the corporate social responsibility channel," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1988-2010, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jadmsc:v:13:y:2023:i:9:p:206-:d:1241858. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.