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This thesis aims to investigate the role of the extended audit report (EAR) and audit materiality in the audit reporting model. For this purpose, the study examines antecedents, content, and implications of the EAR and audit materiality. The thesis consists of three interconnected research studies. The first two research studies focus on the EAR in general, while the third study mainly deals with audit materiality. This first research study aims to investigate the role of the extended audit report (EAR) in the audit reporting model. For this purpose, it conducts a systematic literature review (SLR) study. In particular, it collects and synthesises the existing knowledge of 46 journal articles and 18 working papers in order to find out what is already known about the EAR. Then building up on previous audit reporting models (Church et al., 2008; Mock et al., 2013; Bedard et al., 2016) and current SLR, the study suggests a new audit reporting model designed to integrate all peculiarities of the EAR. Further, the study uses the new audit reporting model for presenting the main findings of the SLR in coherent manner. Specifically, it presents what does extant literature knows about antecedents, content, and consequences of the EAR. The current study also indicates areas where future research could contribute to the literature. The current study represents an exploratory study investigating the content of the extended audit reports (EARs) of the FTSE 100 companies over the 2013-2019 period. To examine the content, and identify potential trends and patterns emerging in the corpus of the EARs, this study applies form-oriented content analysis that looks at latent communication and is supplemented (where possible) by descriptive statistics and visualisation. The study finds that the variety of disclosures included in the EAR increases over time. Despite the structure of the EAR being mainly homogeneous, there is significant heterogeneity in degree of specificity of individual disclosures. This heterogeneity seems to vary according to auditor or auditee characteristics. Overall, implementation of the EAR is associated with more audit-specific information made available to investors. Moreover, the study shows that new disclosures mainly inform investors about the limitations of the audit. For every piece of important information, auditors also tend to introduce a corresponding disclaimer. The effect is valid mainly for mandatory disclosures. This might be due to the highly litigious environment in which auditors operate. Interestingly, in some cases, auditors started to disclose negative, uncertain, and forward-looking information, which implies that auditors can use the EAR for their own benefits like reducing their risks and promoting their services and image. The study suggests that all the trends and patterns arising in the EAR have the potential to reveal auditors' motives, as well as that the EAR can serve as a tool for establishing a dialogue between stakeholders. The third study aims to investigate the role of audit materiality in the audit reporting model. For this purpose, the study, first, examines the determinants of audit materiality. The analysis is based on a sample of 408 firm-year observations, representing 68 non-financial FTSE 100 companies over six years. The study employs a fixed-effects model involving three types of variables: audit, firm, and corporate governance characteristics. The study finds that all three types of factors affect auditors' materiality decisions. Based on the specified model, the study further examines the determinants of materiality components and audit materiality disclosure. Overall, the study establishes materiality components as poor determinants of the materiality threshold. The extent of materiality disclosure appears to significantly depend on the audit firm and client firm's cash profitability. Another additional analysis addressing the consequences of audit materiality finds that higher audit materiality leads to reduced audit fees and impaired audit quality. In terms of audit lag and cost of capital, the materiality threshold was found to be an irrelevant indicator.

This thesis combines various aspects of securitisation literature mainly focusing on the European securitisation market and consists of three empirical studies in securitisation pricing. In the first empirical study (Chapter II), we study the information content of ABS yield spread at origination. Previous studies demonstrate that agents within the chain of securitisation process can influence investor decisions in evaluating the price of ABS bonds and potential risks associated with such products. Legal advisors, one of the main parties who are actively involved in the set up and the selling of ABS bonds, are significant omission in the literature. The main objective of this study is determining the value of legal advisors through investor perspective in structured finance. Our findings indicate that legal advisors who had past partnership with issuers had positive impact on ABS transactions. Investors seem to have valued such experience as they have demanded less spread for those bonds. The second empirical study aims to compare the boom and recovery periods of structured finance in relation to conflict of interest. Similar to the US, European Union has introduced several measures to improve transparency and tackle incentive problems. Credit Rating Agency (CRA) regulation, as part of the same initiative, has been implemented in three phases to strengthen regulation and supervision over rating agencies. The aim of this study is to investigate the effectiveness of such measures in tackling conflicts of interest. Our analyses reveal that the new rules have been effective in reducing conflicts of interest between rating agencies and issuers. However, we also find that issues such as rating shopping and rating over-reliance are still present to a certain degree. We conclude the chapter with our policy recommendations that might help in further improving the securitisation market in the EU. The final empirical study examines the global securitisation market, including the US and the EU. This chapter highlights the significance of financial intermediaries in securitisation. The key purpose of this study is to investigate possible determinants of service fees received by ABS bond issuers. Financial intermediation is crucial in reducing information asymmetry in capital markets, particularly so in the market for structured bonds. Based on our estimations we find that top-tier investment banks are compensated better for the services they provide in comparison to less reputable banks. This positive relationship between issuer reputation and their service fee could be explained by a 'premium fee - superior quality' equilibrium 1. We also find the initial yield spread of ABS bonds can be an influential factor in evaluating issuers' service charge. 1 Klein and Leffler (1981); Chemmanur and Fulghieri (1994).

Academics acknowledged the positive correlation between Market Orientation (MO) Theory and business profitability at Small and Medium Enterprises. Marketing scholars emphasized on the magnitude of Integrating Inter-Functional Coordination in order to improve staff performance, as well as, to create superior customer value. However, the research identified a spotting gap in marketing literature that neglect the topic of Integrating Inter-Functional Coordination (IIFC) with the Market Orientation (MO) theory. Scholars defined the Integration of Inter-Functional Coordination as optimisation of dynamic capabilities such as staff engagement and knowledge sharing to improve performance of interdepartmental functions. In addition, academics posit that Information Technology such as Enterprise Social Media platforms crucially assist to improve staff capabilities through increasing engagement and knowledge sharing among staff. Consequently, the research developed a conceptual framework that aims to evaluate the impact of using Enterprise Social Media platforms to Integrate Inter-Functional Coordination through the inclusion of the indirect interactive moderated-mediation effect of staff capabilities. Online survey questionnaire designed and submitted to Information Technology SMEs at Gulf Cooperation Council area and which consists six countries (Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Oman and Bahrain). Data gathered and screened from total of 684 respondents at ICT SMEs in GCC area. The research adopted Structural Equation Modelling with AMOS for data analysis in order to analyse complex interactions relationship between latent and observed variables at the framework. Four hypotheses are tested and results indicated a full significant indirect interactive moderated-mediation effect of optimizing staff capabilities through the impact of using enterprise social media platforms to integrate inter-Functional coordination. The research contributes to the knowledge of marketing literature through the information technology context with the inclusion of strategic management approach. Interestingly, a recent research identified that one of the main challenges facing the performance of the SMEs is due to the lack of optimisation of staff capabilities. This research presented a theoretical framework and finding that provides an optimization of staff capacities. Therefore, this research may present a second potential contribution to literatures of strategic management through the findings that lead to optimise staff capabilities.

Following the 2007-2009 global financial crisis, researchers widely consider that failures and weaknesses in corporate governance contributed to excessive risk-taking and poor performance of banks (Beltratti and Stulz, 2012, Diamond and Rajan, 2009). Bank governance may be a key cause of bank system failures which may lead to financial crisis. Therefore, the sound corporate governance practices in banks, and whether and how bank governance differs from non-financial firms is imperative for bank-level governance as well as for the country level financial system stability. For the shareholders and other relevant stakeholders, it is equally important to know how the corporate governance of banks affects their economic outcomes. Furthermore, failures of banks during the 2007–2009 financial crisis generated a costly stated-led resolution for taxpayers. Public financing used for bailouts of banks in developed countries on average accounted for 5% GDP, especially, during the period 2007–2009. For example, taxpayers of the United Kingdom, which have large banking sector industry relative to its GDP, had to pay around 19% of GDP for bank bailout cost during the period 2007-2009 (Dermine and Schoenmaker, 2010). Thus, bank governance is not only important for bank-level shareholders and depositors wealth but also crucial for the whole economic system's prosperity and stability.

This study investigates the impact of reputation on the pricing and performance of securitised bonds. On the one hand, we ascertain whether investors incorporate the reputation and experience of issuers and trustees into pricing mortgage-backed securities (MBS). On the other hand, we examine the link between the disciplining mechanisms of price and issuer reputation on the performance of mortgage-backed securities proxied by delinquency rates and rating changes. We address these objectives using pricing and performance data on the MBS issued from 1999-2007 in 14 European countries’ securitisation markets. In perfect capital markets, asset backed securitisation should be irrelevant. However in an environment with asymmetric information, banks prefer to securitise assets rather than fund assets with deposits. The literature concurs that European banks mainly engage in securitisation to augment their liquidity positions and diversify their funding alternatives. Other incentives include risk diversification and regulatory capital arbitrage, however, this was a more common motive in the US, prior to the financial crisis. During that period, the growth of securitisation was fuelled by increased credit supply which in turn was nurtured by relaxed lending standards and a low interest rate environment. Furthermore, banks retained riskier loans and junior tranches to signal the quality of securitised bonds to investors. Hence securitisation, originally designed to transfer credit risk, ultimately involved very limited risk transfer. This trend resulted in the accumulation of risks on banks’ balance sheet which in tend increased the likelihood of a systemic crisis. Contemporary evidence from the equity markets also indicates securitisation announcements typically had negative wealth effects on the market value of issuing banks. As MBS issuance levels increased in the years preceding the financial crisis, investors in securitisation transactions also began to incorporate varying credit factors in excess of credit ratings into the launch spreads of securitised bonds. More importantly, spreads were informative enough to predict bond performance in terms of cumulative losses and rating downgrades. We examine pricing from two dimensions. In the first empirical chapter, we assess the certification value of issuer reputation in securitisation by examining initial yield spreads of MBS. We find that issuer reputation has a certification value for riskier, difficult to evaluate MBS, especially when information asymmetries in credit markets intensify. Furthermore, we show that MBS originated by subsidiaries of foreign banks are perceived to be riskier, regardless of the repuation of the issuer. We also find that investors require higher yields if there is a higher probability of rating shopping and when issuers expand rapidly. In the second empirical chapter, we consider the role of trustees –who are nominated to protect the interests of investors– in securitisation pricing and whether investors rely on them to mitigate risks. We assess the effect of trustee reputation on initial yield spreads and we find that engaging reputable trustees led to lower spreads during the credit boom period prior to the 2007-2009 financial crisis. Our findings suggest that trustees’ reputation was considered by investors to be more important when risk assessment became more challenging. Thus, investors began to associate trustee reputation with effective debt monitoring as the concern for defaults grew in the boom period. In hindsight, it is evident that investors took steps to protect their investments, however inadequate, by adjusting the valuations of the structured notes they purchased. Concerning performance, in the third empirical chapter, we find that reputable issuers sold bonds collateralized by low-quality assets during the boom period. However, these bonds were less likely to be downgraded by rating agencies, probably due to the compensating effects of structuring techniques. We attribute this decline in quality to reduced monitoring efforts. We also find that foreign reputable issuers tend to sell lower quality bonds, which are more likely to be downgraded. Furthermore, we confirm that initial yield spreads are informative enough to predict performance. More specifically, this finding is solely driven by non-AAA rated bond yields. Our key finding, however, is that initial yields were generally not informative in the years preceding the boom period (2004-2007). Therefore, at the turn of the millennium, most investors exclusively relied on credit ratings. However, during the growth period, sophisticated investors began to price the increased uncertainty and complexity associated with MBSs. Overall, the analysis provides some insights on the role of reputation in the securitisation markets. Investors demanded lower spreads on securities with reputable sponsors and trustees especially during the growth period preceding the 2007-09 financial crisis. Although the quality of the assets underlying these securities deteriorated rather rapidly, the securitised bonds were less likely to be downgraded, most likely due to countervailing structural features. Furthermore, the findings of this study show that investors, mainly sophisticated investors, grew increasingly sceptical in the years preceding the financial crisis. This is evident in the relative predictive potency of initial yield spreads on non-prime bonds issued during this period.

Gulf Cooperation Council (GCC) countries showed a remarkable economic growth in the past decade due to being a major oil exporter, attracting significant foreign investment, becoming a major global trading partner and integrating further to the global economy. These developments have resulted in the need to institute advanced corporate governance norms for GCC companies. However, corporate governance systems and practices in the GCC countries are of recent origin and, albeit the importance of corporate governance practices in transforming GCC economies, there is a dearth of academic research on corporate governance in GCC countries. Our motivation for this research is the increasing importance of GCC economies within the world economy and the lack of research on corporate governance mechanisms in these countries. We believe we make a significant contribution to the existing research by providing comprehensive empirical insights into different aspects of corporate governance practices and firm performance in the GCC countries. In particular, our focus is on how corporate performance is affected by ownership structure and executive compensation. We test these relationships using a uniquely constructed and hand collected data of 349 listed companies in Kuwait, Saudi Arabia, Oman, Qatar and United Arab Emirates for the years between 2006 and 2011. We start by formulating a theoretical base for the study through a discussion on how major theories of corporate governance evolved over time and reviewing the state of empirical research in corporate governance in general as well as in the context of the GCC region. We find that the corporate governance practices and standards prevailing in the GCC countries are not comparable to those followed in other developed countries because of many challenges identified by previous research. We also find that there is a large scope for the implementation of globally comparable corporate governance practices in the GCC countries. In our first empirical analysis, we investigate the impact of ownership structure on firm performance. The issue as to whether ownership structure matters for the performance of firms has been an important subject of debate in the corporate finance literature. Our objective here is to explore in more detail the factors that motivate particular types of ownership structure and the potential impact of ownership structure and firm performance in the Gulf region. We find that higher insider ownership leads to better performance, especially when insider owner is the Chairman. A larger ownership by institutional investors has a positive impact on firm performance. On the other hand, we find that GCC firms with high family ownership perform does not perform well. In our second empirical analysis, we examine the key determinants of the executive compensation to top five executives in GCC firms. We find that larger firms and firms with potential future growth pay higher total compensation to their executives. Concentrated ownership structure leads to lower compensation levels while firms with high family ownership as well as external ownership tend to pay higher compensation. We also find that managerial as well as institutional ownership of companies tends to lead to higher salaries. Companies that have more growth potential seem to pay higher bonuses. We also find that the choice between behaviour versus outcome oriented compensation is mainly influenced by firm size, the presence of executive members on the board, and managerial ownership. Larger companies prefer to pay bonus as part of executive compensation. Companies that have higher number of executives or owned by managers are also tend to pay more compensation through bonuses. In our third empirical analysis, we examine the relationship between executive compensation and firm performance. We find that higher total executive compensation leads to better firm performance. On the other hand, we do not find any significant relationship between the components of compensation (salary and bonus) and performance. We point out that specific GCC economic environment and features peculiar to this region has more impact on the firm performance rather than the executive compensation. Overall, findings of our study is valuable in assisting key decision-makers, such as the shareholders or policy makers, in enhancing firm performance through diversifying their ownership structures and utilising the right policies in compensation of executives in GCC countries.