The impact of corporate governance mechanisms on modified audit opinion: empirical evidence from Jordanian public listed companies

• Main Author: Zaid Alkilani, Saleh Nafeth Saleh
• Format: Thesis
• Language: English; English
• Published: 2022
• Subjects: HG Finance
• Online Access: https://etd.uum.edu.my/10945/1/depositpermission-901527.pdf; https://etd.uum.edu.my/10945/2/s901527_01.pdf; https://etd.uum.edu.my/10945/
• Institution: Universiti Utara Malaysia

As established by agency theory, corporate governance mechanisms can increase financial reporting credibility and protect the interests of all stakeholders. To understanding this agency theory perspective better, this study investigates the influence of corporate governance mechanisms on the prospect of receiving a modified audit opinion (a proxy for the quality of financial reporting) among Jordanian public listed corporations. Accordingly, thirteen hypotheses were developed to investigate the relationship of boards of directors’ effectiveness, audit committee characteristics, and ownership structure on the issuance of modified audit opinion in Jordan. Logistic regression was utilised to analyse the 109 company-year observation data of two sectors (service and industrial sector) from 2012-2017. Significant findings were consistent with the hypotheses that Jordanian public listed corporations with the board of director size, the board of director with multiple directorships, family ownership, and foreign ownership are less likely to receive a modified audit opinion. Moreover, the results indicated that boards of director’ characteristics, audit committee characteristics, and ownership structure contributes to decreasing the prospect of receiving a modified audit opinion. The findings of this study provide input to regulators, policymakers and companies listed on the Amman Stock Exchange for practising good corporate governance.