Internet Financial Reporting by Mitra et al. and Kuruppu et al.
The statistical tests conducted in table 3 on the paper investigating the use of internet in financial reporting in Sri Lanka provide useful information. This is important in assessing the relationship between the use of internet in financial reporting and the industry in which the company is operating. One of the tests conducted in the study is the Pearson Chi-Square test. This test is important in evaluating the likelihood that the difference observed in the data collected arose by chance. The table contains data on company’s use of internet financial reporting in different industries. The Pearson Chi-square values for the variables used in the study are listed and the difference is identified. The variables under review include company history, products and services and financial information disclosure. As a result of the statistical test, the reader is able to identify the differences between the variables from industry to industry and measure how real this difference is. The likelihood ratio enables the reader to understand the number of times the data is more likely in one model than the other (Liuand Liu, 2013).
There are various advantages and disadvantages of using either sampling or using the entire population in conducting research. The major considerations when making a decision on whether to use the entire population or a sample of it a determination of the size and population and identification of which of the methods will result to data with high confidence levels. One advantage of sampling is that it is very practical and saves time in case the population is very large. This means that sampling helps to represents populations with different characteristics while making sure that every group is represented in the sample. The other advantage of sampling is that it is economic. Working with sample population is easier and less costly than working with the entire population. The other advantage of sampling is that it gives a high suitability ration towards different surveys. Sampling also has some disadvantages. They include high chance of bias. The sample population may be biased and may fail to represent the entire population accurately. It is also difficult to get a representative sample and hence presenting a challenge to the researcher. The advantages of using the entire population is that it gives more accurate data than when sampling is used since the views of every character in the population are represented. Using the entire population minimizes the chances of bias and also reduces the chances of committing error. The disadvantage of using entire population is that it is uneconomical. It is also impossible to use this method in instances where the population is very large hence rendering it unreliable.
Given the objective of the study is to analyze the use of internet in financial reporting in Sri Lanka, it is more appropriate to use the entire population in this research. This is because, by using the entire population, the researcher is able to identify which of companies use financial reporting and which ones do not. The population size is small and therefore, it is more appropriate to use the entire population. Additionally, since the objective of the study is to determine the percentage of companies reporting their financial statements using the internet, the only way to collect accurate and reliable data is to use the entire population in the research. The study on corporate web reporting in Bangladesh should also be conducted using the entire population. The first reason is that if sampling is done,the companies which are left out of the sample may have completely different results from those included in the sample(Lecoeuvre, 2016).This is means that it is difficult to get a representative sample in this study and hence the results of the data collected may be misleading.
Agency Theory and Stewardship
The agency theory is the theory that explains the relationship between the principal and the agent who acts on behalf of the principal. One of the assumptions of this theory is that both the agent and the principal act on self interests in the relationship between the agent and the principal. The other assumption is that the agent will always act in the best interest of the principal. These assumptions mean that the agent will make decisions and take actions that are of best interest to the principal. The theory also assumes that the principles have moral responsibility for their actions which cannot be shelved or transferred to another person. The principal is also assumed to have full knowledge about the consequences of actions by the party they have chosen to be their agent and hence they have to accept whatever comes of the decisions and actions by the agent ( Leitner, 2012).
According to the agency theory, directors or CEO`s of an organization do not bear full responsibility on the success or failure of an organization. This is because, they do not own all the shares in the company and therefore they can’t bear the consequences of organization performance alone. Due to this reason various control mechanisms have been put in place to monitor the actions of the agents. This helps to ensure that their interests are aligned to those of the organization and hence making sure that they act in the best interest of the principal. The compensation system in many organizations is tied to the performance of the organization where the agent acts on behalf of the principal. The agency theory has brought about an executive compensation system that is efficient and that is based on performance variables such as company profits, share prices and return on investment ratios (Trucco, 2015) . These are used to measure the performance of executive director and hence determining their level of compensation.
Employees have different attitudes to risk depending on their personality and their decision making experiences. Risk attitudes can be classified into the following categories; Risk averse, risk seeker and risk neutral attitudes towards risk. The risk attitudes are very important for decision making by employees of a particular company. Risk is a very important part of doing business by organizations. The risk attitude of an employee will determine the kind of decision they will make and how profitable or unprofitable the organization becomes. An employee who is risk averse will tend to shy away from taking actions that are risky but highly profitable for the organization and hence there is a very high likelihood that the organization won’t make much profit (Sarwar and Abdullah Nadwi, 2013). A risk averse employee is likely to get less compensation. A risk seeker employee may subject an organization to high risk levels and hence if the organization performs well, the employee will get compensation depending on the level of performance which is determined by their risk attitude.
If the executives’ compensation is viewed as excessive by the other employees or other important stakeholders in the organization, it brings about various problems internally. According to (New, Trends in Finance and Accounting, 2017), excessive compensation for executives de-motivates employees. This is because, the employees may feel that the executives are benefiting at their expense. The employees feel that they are working so hard yet the executives are getting the benefits and hence they may become less productive. The other internal problem that may result from perceived excessive compensation is that it may weaken employee loyalty. When employees feel that what the executives are earning is too much compared to their pay, they become less loyal to the organization and they may want to switch organizations. This eventually results to employees losing the talent pool in the company.
Executive Compensation
The over-payment of company executives means an extra burden to shareholders. Once the shareholders feel that the directors and top manager earn more than they should, they may tend to sell their stake in the business and at some point, the share price of the organization may drop.
The assumption of agency theory being considered in this case is that both the principal and the agent are motivated by self interests. The self interest assumption has been faced by various conflicts and opposition from different authors. According to (Hynesand Loewenstein, n.d.), if parties are motivated by self interests, the agents are likely to be influenced by self-interest. The agents of a company are likely to pursue activities that are in line with their self interest and these activities may not be line with the activities of the organization. The article argues that the agent should act solely in the interests of the principal and since he/she cannot fulfill the interests of both the principal and their own interests. The standard of agency loss is used to determine whether the agent has acted in their own interests or in the interest of their principal. The agency loss is the difference between the expected best possible outcome for the principal and the consequences of the actions of the agents (Procha?Zka, 2017). If an agent acts in the best interests of the principal, the agency loss in that case is zero. If an agent deviates from the best interests of the principal, the agency loss keeps on increasing.
One of the alternatives to the agency theory is the stakeholder theory. The stakeholder theory is used to outline the interests of various stakeholders in an organization. The theory also defines the relationship between various stakeholders in an organization. The stakeholder theory describes the composition of the organization that is made up of individuals with different interest (Demski, Antle, Gjesdal & Liang, 2007).The decisions of the business should represent the collective group and advance cooperation between the groups.
The other alternative of agency theory is the modern contract theory. The modern contract theory is used to avoid conflicts of interests between the agent and the and the principal in a transaction or any agreement. The theory argues that the interests of the agent are directly linked to those of the principal and hence making it inevitable that the agent will act in the best interest of the principal (Mintz, 2014). The optimal contract ensures that all the parties to an agreement benefit optimally. The major deficiency of agency theory is the assumption that the agent and the principal act on their own self interest. When the agent acts itself interest, at times the interest of the agent may be contrary to those of the principal and hence the agent will not act in the best interests of the principal(Meng, Sui and Xu, 2011). The other two theories also address the issue of risk sharing between the agent and the principal.
Stewardship in an organization means responsible planning and management of resources by the management of the organization. Stewardship is very crucial in accountability within an organization. This is important in maintaining public trust and trust by various stakeholders within the organization (Wolk, Dodd & Rozycki, 2013). Stewardship has changed over the years due to the increasing need for accountability especially among the nonprofit organizations. Stewardship has become increasingly important today to the increasing need for accountability from the public and the stakeholders of the organization. Organizations are needed to manage resources more efficiently and demonstrate the same through transparent reporting and appropriate responses to financial data. The public requires nonprofit organizations put measures in place to ensure accurate and dependable systems are in place. About two decades ago, big Fund management groups did not have analysts evaluating on how to vote in the forthcoming general meeting (Bamberg& Spremann, 2007). This role used to be mainly performed by the manager and this made it very difficult for the manager to coordinate these functions appropriately. Companies nowadays are able to communicate better with stakeholders unlike in the past where this was not possible. The composition of the board has also changed. Non-executive directors used to come from a small group of individuals who selected themselves and this led to poor and unethical practices in the organization.
Research in Auditing
The introduction of the article is not so good because the writer does not discuss the motivation behind this research. The author should briefly indicate the reasons that motivated them to conduct this study and how it s relevant to the audience. The literature review is fairly good since the authors have discussed the gap in auditing in different countries. The author has cited different writers who have conducted different studies in various countries to establish the audit gap in these countries. The literature review can be improved by citing the relevant theories that can be applied in this study and that were applied by the researcher (Macintosh & Quattrone, 2009). The methods used by the other authors to conduct the researcher should also be highlighted.
The research method used in the study is a combination of both qualitative and quantitative research methods. The data is collected using surveys where a structured questionnaire was used to collect data from the respondents. The total population of private firms in Iran is N=1389 and the sample size chosen for the study is n=318. The Likert scale is used as the measurement tool in this study. The weaknesses in this section of the research is that the author has not indicated the sampling design that was used to select the respondents from the population (Deb, 2009). This is important in determining the degree of bias which may exist in the outcome resulting from the study. The author should indicate the data analysis methods and data presentation tools used in the study.
The first hypothesis of the study states that there is a meaningful difference between the auditor’s role and responsibility in the management and the auditor’s point of view. The hypothesis is not so good because it is not tentative and it indicates the expected outcome with absolute certainty the hypothesis is not testable. The hypothesis should be” There exist a meaningful difference in the views of management and those of auditor concerning the roles and responsibilities of the auditor in an organization” The second hypothesis should be” there is a significant difference between the management point of view and that of auditors on the independence of the auditor”
The results of the study indicate that there is a meaningful difference between the auditor’s roles and responsibilities in management and auditors` point of view. Levene`s test is used to test the hypothesis and its confirmed. The second hypothesis is not confirmed since the difference between the management view and auditors view is 0.02 which is negligible. The results have been presented perfectly in table form. An improvement can be made by offering more discussion of the results and how the results have helped to answer the research questions.
The conclusion highlights the aim of the study and identifies the population used in this research. The conclusion also highlights the results of the hypothesis test conducted. The conclusion should also include some of the major findings of the literature review as well as the research methods used in the study (Yusopov, 2017). In addition to this, it should highlight ways in which the research has helped to fill the gaps identified at the beginning of the study. Recommendations on future research on the subject can also be made in the conclusion section.
The population used to conduct the study comprised of all the users of financial statements in Nigeria. The study identified all the financial statements users and used purposive sampling to select the sample population. Purposive sampling ensures that only knowledgeable respondents are chosen. There is a weakness in choosing this sampling design since it may result to bias in selection of population sample. The researcher does not have any definitive and objective manner of defining knowledge of a respondent. The population uses 250 respondents chosen from the entire population of users who are the creditors, investors, stockbrokers and accountants (Belal, 2016). In choosing the sample population the researcher also failed to be specific and hence the outcome of the study may not be very meaningful.
Validation instruments used in this study are primary in nature. The research used primary data exclusively. The researcher used structured questionnaire to collect the views and assessments of the respondents concerning the research subject. The researcher should have used a combination of interviews and questionnaire in order to gain a deep insight into the subject (Yoo and Koh, 2014). The use of interviews does not give the respondent an opportunity to contemplate their answers and the data collected using interviews is reliable. The researcher should also have used secondary data to back up the primary data collected.
The research questions and the hypothesis are not well linked in this study. The research question on the perception of the users of financial statements to audit expectations performance gap does not link well with the first hypothesis since the first research questions addresses the role of auditors in Nigeria. The second research question too is not well linked with the hypothesis number two.
The research questions should be “Does the perceived audit performance gap significantly affect the credibility of audit profession in Nigeria”?. Q2. “Does the Institute of Chartered Accountants of Nigeria guarantee the issuance of independent reports by the external auditors?
References
Bamberg, G., & Spremann, K. (2007). Agency Theory, Information, And Incentives. Berlin, Heidelberg, Springer Berlin Heidelberg. Http://Public.Eblib.Com/Choice/Publicfullrecord.Aspx?p=3093925.
Belal, A. R. (2016). Corporate Social Responsibility Reporting In Developing Countries: The Case Of Bangladesh. London, Routledge. Http://Www.Tandfebooks.Com/Isbn/9781315574332.
Demski, J. S., Antle, R., Gjesdal, F., & Liang, P. J. (2007). Essays In Accounting Theory In Honour Of Joel S. Demski. New York, Springer. Http://Public.Eblib.Com/Choice/Publicfullrecord.Aspx?p=323496.
Deb, T. (2009). Compensation Management: Text & Cases. New Delhi, Excel Books
Hynes, J. and Loewenstein, M. (n.d.). Agency, partnership, and the LLC in a nutshell.
Lecoeuvre, L. (2016). The Performance of Projects and Project Management. Abingdon, Oxon: Taylor and Francis.
Leitner, S. (2012). Information Quality And Management Accounting [Recurso Electrónico] A Simulation Analysis Of Biases In Costing Systems. Alemania, Springer Healthcare Ltd.
Liu, H. and Liu, S. (2013). Salesperson compensation contract design based on multi?agent principal agent model. Nankai Business Review International, 4(1), pp.78-86.
Macintosh, N. B., & Quattrone, P. (2009). Management Accounting And Control Systems: An Organizational And Sociological Approach. Hoboken, N.J., Wiley.
Meng, F., Sui, X. and Xu, Y. (2011). Game Analysis between Principal and Agent under Principal-Agency Relationship. Applied Mechanics and Materials, 55-57, pp.1898-1904.
Mintz, S. M. (2014). Accounting For The Public Interest: Perspectives On Accountability, Professionalism And Role In Society. Dordrecht, Springer. Http://Public.Eblib.Com/Choice/Publicfullrecord.Aspx?p=1466315.
New Trends In Finance And Accounting. (2017). [Place Of Publication Not Identified]: Springer.
Procha?Zka, D. (2017). New Trends In Finance And Accounting: Proceedings Of The 17th Annual Conference On Finance And Accounting. Https://Login.Proxy.Lib.Strath.Ac.Uk/Login?Url=Http://Link.Springer.Com/10.1007/978-3-319-49559-0.
Trucco, S. (2015). Financial Accounting: Development Paths And Alignment To Management Accounting In The Italian Context. Http://Search.Ebscohost.Com/Login.Aspx?Direct=True&Scope=Site&Db=Nlebk&Db=Nlabk&An=1016287.
Sarwar, M. And Abdullah Nadwi, M. (2013). Re-Analyzing The Inherent Complexities In The Principal/Agent Relationship Of Two-Tier Mudarabah. Ssrn Electronic Journal.
Wolk, H. I., Dodd, J. L., & Rozycki, J. J. (2013). Accounting Theory: Conceptual Issues In a Political And Economic Environment. Thousand Oaks, Sage Publications.
Yoo, T. And Koh, Y. (2014). Agent Or Structure For Principal–Principal Conflicts? Audit Firms Versus Foreign Ownership In The Asian Context. Asian Business & Management, 13(4), Pp.309-332.
Yusupov, R. (2017). The Problem Of The Relationship Of The Principal And Agent In Corporate Governance. Business Strategies, (5), Pp.23-27.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
