Ownership Structure Factors Research Articles

Family firms, client importance, and auditor reporting behavior: evidence from China

PurposeThis study aims to investigate whether auditors compromise their independence for economically important clients in family business settings.Design/methodology/approachThe authors empirically examine the research question based on China for the years 2011 to 2020. The dependent variable is the auditors’ propensity to issue modified audit opinions, which is a proxy for auditor independence. The authors use relative client audit fees as a proxy for client importance. To address endogeneity issues in the selection of family firms, the authors use the two-stage least squares regression model and, subsequently, the propensity score matching and Hausman firm fixed effect modeling.FindingsThis study reveals that the propensity to issue modified audit opinions is positively correlated with client importance. Big-N auditors are more likely to issue modified audit opinions for their economically important family firm clients, whereas such evidence is not found for non-Big-N auditors. Results are consistent and robust to endogeneity test and sensitivity analysis.Originality/valueThis study enriches the literature on auditor independence and the effect of family firms’ ownership structure factors on audit reporting behavior for their economically important clients. Findings may prove useful for managers and practitioners interested in family business.

The Effect of Stock Return, Inflation, and the Ownership Structure to Investment Risk

Economic development in Indonesia is currently facing the risk increases even during the global financial crisis. The global financial crisis affects the economy of a country including Indonesia. The economic crisis in Indonesia have an impact on the declining performance of the company's fundamentals on the stock market. This degradation caused by a failure in risk management, especially the unsystematic risk. Many companies can’t manage they debt policy, investment decisions, earnings management, liquidity and ownership structure that has implications for the risk. The objective of this research is to investigate the effect of stock return, inflation and ownership structure to investment risk of Manufacturer Industries in 2003-2009. This research used four multiple regression model, and the models are: 1st model to investigate effect of the stock return factors to stock return; 2nd model used to investigate effect of the inflation factors to the inflation; 3rd model used to investigate effect of the ownership structure factors to the ownership structure; 4th model used to investigate effect of the stock return factor, inflation as the regional monetary factor, and ownership structure factors to investment risk.Population of this research is manufacturing companies listed in BEI. The sampling method used in this research is purposive sampling and the results are 126 companies according to the criteria of the sample. Pooling data method and judgment sampling is used to collect the data and two stage least squares (2 SLS) as the analysis method.Based on the hypothesis test it can be summarized that all predictor have significant effect simultaneously. Result of the 1st Model, Only Investment and Profitability Effect to stock return partially; 2nd model, SBI, KURS, and M2 effect to the inflation partially; 3rd model only Dividend Payout Ratio and Debt to Equity Ratio Effected to Ownership Structure partially; 4th model, only return variable significantly influence to Investment Risk partially.