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This paper aims to explore the potential effect of key audit matters (KAM) on the audit report lag (ARL). In particular, it aims to discover whether the number of KAMs reported by an audit firm in Jordan is related to the length of its ARL.

The authors analysed data from the first three years of KAM reporting in Jordan (2017–2019) for 194 public listed Jordanian companies to examine the relation between the number of KAMs and the ARL, taking into account several control variables related to the Jordanian context.

This study found that there is no statistically significant relation between the number of KAMs reported by Jordanian audit firms and their ARLs, suggesting that the KAM reporting in Jordan is somewhat superficial, with the selection of what is actually reported as a KAM not directly related to the efforts needed to deal with its concerns. However, this study also found statistically significant positive relations between the ARL and each of audit fees, audit firm size, the issuance of a qualified audit opinion and company leverage and a statistically significant negative relation between the ARL and company profitability.

This is one of the very few studies to cover the potential relation between KAM reporting and the ARL. In a developing country context characterised by limited demand for an external audit of high quality, this study finds that auditors may decouple on their reporting of KAMs by not actually making significant efforts to deal with them.

The purpose of this study is to examine the relation between related party transactions and both accrual and real earnings management practices in Jordanian industrial public-listed companies, taking into account the uniqueness of the Jordanian company ownership structure.

Data were collected from Jordanian industrial public-listed companies for the period 2011–2017. Accrual earnings management is measured by using the modified Jones model, whereas real earnings management and related party transactions are measured by using relevant proxies. A regression model is developed and used to assess the relation between related party transactions and earnings management, taking into account the effects of ownership concentration, family ownership and institutional ownership levels of the companies involved.

Accrual earnings management is negatively associated with related party transactions. Regarding the role of ownership structure, the presence of institutional investors is positively associated with using both related party transactions and real earnings management, whereas ownership concentration plays an efficient role to mitigate the use of both accrual earnings management and related party transactions. No statistically significant relations between real earnings management and related party transactions exist.

This study has direct practical implications for the Jordanian regulatory authorities to enact regulations to limit the misuse of related party transactions and earnings management transactions and ensure sufficient monitoring of these transactions because of their prevalence. Jordanian companies should also enhance their corporate governance systems to better approve and monitor such transactions, including enhancing the role of independent and non-controlling board members in this process.

Related party transactions are considered as a major concern of financial reporting quality in developed countries, and such transactions are found to be relatively more problematic in developing countries, where corporate governance is generally weak, and there is limited disclosure and transparency in financial reporting. From this perspective, this study is one of the very few studies in developing countries that explore the issue of related party transactions and their association with earnings management practices. Thus, the findings of this study can arguably be to some extent generalized to other developing country contexts, because of relatively similar business environment conditions, and therefore potentially fill a gap represented by the paucity of similar studies in developing countries.

This study examines the relationship between audit committees (ACs) and earnings management (EM) in the developing country context of Jordan. In particular, it investigates whether audit committee attributes, including their size, independence, expertise and meetings, are able to restrict discretionary accruals as a proxy for EM.

The generalized least square (GLS) regression was used to study the association between audit committee attributes and discretionary accruals, as a proxy of EM, for a sample of industrial firms listed on the Amman Stock Exchange (ASE) during the period 2012–2020. Data were obtained from the firms' annual reports.

The regression results indicate that audit committee independence is the only audit committee attribute that seems to improve the effectiveness of ACs, in that it is significantly associated with less EM, while other audit committee attributes that were tested do not show statistically significant associations.

In emerging markets, like Jordan, ACs may not be an efficient monitoring mechanism; therefore, it can be argued that the prediction made by the agency theory about the role of ACs in mitigating opportunistic EM activities does not necessarily apply to all contexts.

A better understanding of audit committee effectiveness in developing countries could help regulators in these countries assess the impact of planned corporate governance (CG) reforms and to better monitor and enhance the performance of ACs.

In a setting characterized by closely held companies, high power distance and low demand for high-quality CG mechanisms, this study contributes to understanding how this business system operates, and how improving CG mechanisms could be successful in such cultures.

This study investigates the under-researched relationship between audit committee characteristics and EM in developing countries. In so doing, it aims to provide new insights into this relationship within the developing context case of Jordan, including if and how the institutional setting influences this relationship.

Purpose – The purpose of this paper is to survey views of bankers in Jordan about the usefulness of fair value accounting and major obstacles facing its implementation in practice.

Methodology/Approach – A structured questionnaire was administered to individuals holding high positions in Jordanian banks. The questionnaire covered the respondents' views about the appropriateness of using fair value accounting, the usefulness of fair value figures in terms of their relevance for decision making and the obstacles facing the application of fair value accounting in practice.

Findings – Results of the survey showed that while there was general approval of the use of fair values in financial reporting, there were some reservations about their relevance in terms of predictive value and, more importantly, feedback value. Major obstacles facing the usefulness of fair values in financial reporting included, according to respondents, (1) the possibility of fraud in fair value reporting, (2) the ambiguity of accounting standards on fair value application and (3) the reliability of figures measured using fair value accounting, as opposed to those measured using historical cost accounting.

Social implications – The paper discusses the positive and negative aspects of application of fair value financial reporting in accounting. It discusses how fair value financial reporting may be useful for decision making of users of financial statements and what obstacles may limit this usefulness. The paper also discusses the implications of the findings for Jordan and other emerging economies, including suggested ways to reduce the possible negative effects of fair value accounting.

Originality/Value of paper – Fair value accounting practice is relatively new to Jordan, and the Jordanian context, as a less-developed country with a low-efficiency stock market, is significantly different to the environments in which fair value accounting practices were established. The effects of applying fair value accounting in Jordanian financial reporting practices are under-researched, so this study yields views on the reliability and relevance of fair value measures and the ease of their application in practice that could be specific to the Jordanian environment and differ significantly from results from developed countries. The findings generally support this argument.

The purpose of this paper is to explore the current practices of internal auditors in banks in Jordan regarding risk management, especially the risks they are most involved in dealing with, the nature of their responses in the presence of these risks, and appropriateness (according to the Institute of Internal Auditors (IIA), 2009a) of these responses.

A questionnaire surveyed views of internal auditors about their roles in risk management. It asked about 20 different types of risks, and, for each individual risk, how internal auditors would respond in its presence.

The role of internal auditors in risk management in banks in Jordan was found to be limited. The risks that internal auditors were most involved in managing were those related to compliance, while the risks least dealt with by internal auditors included those related to the Jordanian economy and culture. Also, most of the respondents reported that they did undertake some inappropriate roles in dealing with the risks.

The findings suggest the possibility that internal auditors are not aware of the importance of several types of risks and of the appropriate roles for internal auditors in risk management. Therefore, increasing awareness of these issues is very important.

The research topic is relatively new and very under-researched in the Jordanian environment. This study is therefore likely to significantly contribute to the knowledge about how internal auditing operates in a developing country context that differs significantly from the contexts where professional internal auditing standards were issued.

The purpose of this paper is to investigate the relation between a firm's cash conversion cycle and its profitability.

The relation between the firm's cash conversion cycle and its profitability is examined using dynamic panel data analysis for a sample of Japanese firms for the period from 1990 to 2004. The analysis is applied at the levels of the full sample and divisions of the sample by industry and by size.

A strong negative relation between the length of the firm's cash conversion cycle and its profitability is found in all of the authors’ study samples except for consumer goods companies and services companies.

Traditional focus in corporate finance was on the long‐term financial decisions, particularly capital structure, dividends, and company valuation decisions. However, the recent trend in corporate finance is the focus on working capital management. Most of working capital management literature is based on the US experience. This study investigates the relation between the firm's cash conversion cycle and its profitability of Japanese firms where the organizational structure is totally different from that of the US firms; most of the Japanese firms are interconnected and related through corporate groups (keiretsu).