Non‑executive employee ownership and financial reporting quality: evidence from Europe

Sami Adwan; Alaa Alhaj Ismail; Ranko  Jelic

doi:10.1007/s11156-022-01058-8

Non‑executive employee ownership and financial reporting quality: evidence from Europe

Sami Adwan, Alaa Alhaj Ismail, Ranko Jelic

University of Sussex

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

152 Downloads (Pure)

Abstract

This paper examines the association between non-executive employee shareholding and financial reporting quality. The analysis is conducted using a sample of non-financial firms listed in eleven European countries between 2006 and 2017. We find a positive association between non-executive employee ownership and financial reporting quality. Furthermore, we find this positive association to be more pronounced for firms operating in the following settings: higher labour union density, more industry peer firms and more flexible labour market regulations. Overall, these findings support the view that employee shareholding enhances the quality of financial reporting by aligning the interests of employees with those of shareholders through two channels: reduced agency problems and enhanced employee retention. Our study contributes to the research on the impact of ownership characteristics on financial reporting incentives. It underscores the role non-executive employee ownership can play in improving a firm’s corporate governance and therefore the quality of financial reporting.

Original language	English
Pages (from-to)	793-823
Number of pages	31
Journal	Review of Quantitative Finance and Accounting
Volume	59
Issue number	2
Early online date	13 Apr 2022
DOIs	https://doi.org/10.1007/s11156-022-01058-8
Publication status	Published - 22 Apr 2022

Bibliographical note

This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly
from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.

Keywords

Financial reporting quality
Rank and fle employees
· Earnings management ·
Employee ownership

ASJC Scopus subject areas

Accounting
General Business,Management and Accounting
Business, Management and Accounting (miscellaneous)

Access to Document

10.1007/s11156-022-01058-8Licence: CC BY

PublishedFinal published version, 1.28 MBLicence: CC BY

Cite this

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Non‑executive employee ownership and financial reporting quality: evidence from Europe

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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