Corporate governance

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Ismail, T. H., and Z. Alaa, "Stock Option Fraud Prevention in Islamic Culture Country: Does Corporate Governance Matter?", Journal of Financial Reporting and Accounting, vol. 11, issue 1, 2013. Abstract

This paper aims to investigate the extent to which companies in one of the Islamic culture countries, Egypt, are complying with the Islamic implementation of the Anglo-Saxon Model of corporate governance and testing the impact, if any, of such compliance on mitigating of stock option fraud incentives. A logistic regression model is used to examine the effects of board of directors, audit committee, ownership structure and other firm characteristics on the likelihood of stock option fraud. The analysis is based on the data for stock option grants obtained during the period from 2006 to 2009.

The results suggest that the rate of compliance with the Islamic implementation of the Anglo-Saxon Model of corporate governance in Egyptian public-held companies is low. Weak corporate governance allows executives to exercise greater influence over the board of directors and audit committee decisions. Furthermore, a low level of disclosure, duality of CEO, high percentage of insiders in board of director, auditor turnover, and management ownership are among the factors that increase the likelihood of stock option fraud in the Egyptian setting.

This paper provides insights into exposing stock option fraud by Egyptian public-held companies and sheds light on the effective role of corporate governance mechanisms to mitigate this phenomenon. This would help policy setters to enhance compliance with the Anglo-Saxon Model of corporate governance and develop a comprehensive Shari’ah Model of corporate governance that reduces stock option fraud.

Ismail, T. H., and N. M. Elshaib, "Impact of market and organizational determinants on voluntary disclosure in Egyptian companies", Meditari Accountancy Research,, vol. 20, issue 2, pp. 113-133, 2012. Abstract

Purpose – The purpose of this paper is to investigate the impact of market and organizational determinants on the voluntary disclosure level of Egyptian companies.

Design/methodology/approach – Uses a disclosure index of voluntary disclosure that is based upon the following information categories: strategic information; financial information; non-financial information; and future prospect information to rate the level of disclosure. Multivariate analysis, voluntary disclosure determinants: earnings quality; ownership structure; competition intensity; information asymmetry, and possible relationships with disclosure level provide the basis for discussion.

Findings – It is found that the level of voluntary disclosure in the emerging market of Egypt ranges from low to moderate level. There is no significant relationship between a company's voluntary disclosure level and earnings quality and competition intensity, while this relationship is significant for information asymmetry and ownership structure.

Research limitations/implications – The results are constrained by the proxies that represent non-financial factors of the market.

Originality/value – This paper extends prior studies on voluntary disclosure in Egypt by looking at a comprehensive set of market and organizational factors that might affect the disclosure level, based on a structured disclosure index of strategic, financial and non-financial, and future prospect information. The findings would help boards of directors to explain the adoption of certain disclosure strategies, and understand the corporate disclosure behavior.