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International Journal of Law and Management: Evaluation of ownership structure and audit-quality in the wake of the Covid-19 crisis: empirical evidence from Jordan
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Abstract
Purpose – This study aims to collect new empirical evidence to determine how different forms of ownership
structure responded to the recent COVID-19 crisis. In light of this tragedy, it explores the relationship between
ownership structure forms (i.e. block-holders, foreign, institutional and family ownerships) and audit quality
(proxied by audit fees).
Design/methodology/approach – In total, 3,200 firm-year observations for Jordanian enterprises
covering the years 2005 through 2020 are used in an ordinary least squares regression with firm-clustered
standard error to assess the hypotheses.
Findings – The regression results showed that COVID-19 strengthens the association between each type of
ownership (i.e. block-holders, foreign, institutional ownership forms) and audit quality. This result reflects the
need for high-quality audit services during the pandemic by such owners to improve their business decisions and
limit agency-conflict issues. However, the analysis failed to find any effect of COVID-19 when it comes to family
ownership. Family-controlled firms may react faster in crisis situations, and correspondingly, they do not bear
high audit costs. The extended analysis covering the years 2005–2022 came to the same results.
Practical implications – The results aid authorities in their control and management of the auditing
business. The findings have important consequences for policymakers, lawmakers, regulators and the audit
profession as they assess the growing issues in an uncertain economic environment. Evidence is provided that
may be used to reassure investors and aid authorities as they devise appropriate remedies to the pandemictriggered economic crisis. The findings may aid in the improvement of legislation that governs Jordan’s
auditing industry. Furthermore, the results can be generalized to other Middle Eastern countries.
Originality/value – To the best of the authors’ knowledge, this is the first study to empirically evaluate
how different types of ownership affect audit quality in response to a dramatic shift in auditors’ working
conditions brought on by the global health calamity. In emerging economies like Jordan, this type of analysis
allows for preliminary assumptions to be established about ownership status during the COVID-19 outbreak.
It adds to the body of auditing knowledge by shedding light on how various kinds of ownership affect
responses to adverse events. This assessment is intended to serve as the definitive testimony in the field of
accounting regarding the effects of the coronavirus across various corporations’ portfolios.
Esraa Esam Alharasis - Personal Name
NONE
Text
ENGLISH
EMERALD INSIGHT
2023
ENGLAND
JURNAL ILMU HUKUM
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APA Citation
Esraa Esam Alharasis. (2023).International Journal of Law and Management:
Evaluation of ownership structure
and audit-quality in the wake of
the Covid-19 crisis: empirical
evidence from Jordan.(Electronic Thesis or Dissertation). Retrieved from https://localhost/etd