UGB009 - Business Management Project: Journal Article Critical Review

This report presents summaries of three articles from the International Journal of Finance and Accounting, each employing a different research approach. The first article uses a quantitative approach to examine the impact of corporate governance and external audits on earnings management in the UAE financial sector, detailing its aim, objectives, methodology (including statistical analysis), and findings related to CEO duality, ownership structure, and board activity. The second article uses a qualitative approach to investigate the future of accounting in Nigeria, focusing on the role of the Financial Reporting Council (FRC) and the challenges and threats facing the profession. The third article studies the relationship between corporate social responsibility (CSR) and financial performance of Safaricom Ltd, using correlation research design and secondary data to analyze the impact of CSR investments on revenue, net income, and earnings per share, while also reviewing relevant literature and theoretical frameworks such as stakeholder and agency theory. The report concludes with comments on the clarity and systematic approach of each article.

RUNNING HEAD: BUSINESS MANAGEMENT PROJECT
Journal articles

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Contents
Introduction................................................................................................................................2
Articles.......................................................................................................................................2
Article 1..................................................................................................................................2
Article 2..................................................................................................................................5
Article 3..................................................................................................................................8
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
This report details three articles written on the subject accounting, taken from an academic
journal of accounting and finance. A summarized view of each article is presented in the
report and each one has quantitative and qualitative approach and a literature review
respectively. The aim, objectives, methodology and finding of each article is explained in the
report followed by a general conclusion. For this purpose, an international journal is been
chosen and the articles are taken from there.
International Journal of Finance and Accounting
It is a journal which publishes empirical research conducted on Accounting and Finance
theories and continuously contributes to such practices. It publishes various articles and
research paper of high quality made in finance and accounting areas. All the empirical
methods and approach such as quantitative, qualitative, laboratory and various combination
methods are used in such articles. Following are three articles taken from this journal that
include a literature review, quantitative and qualitative approaches.
Articles
Article 1
Impact of Corporate Governance and External Audit on Earning Management.
Evidence from the Financial Sector of United Arabs of Emirates (UAE).
This article uses quantitative approach to analyse the data collected for measuring the impact
of CG and EA on Earnings Management in financial sector of UAE.
Aim
The primary aim of the research was to maximize the organization’s wealth by improving the
capacity of generating income.

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Objective
The objective is to investigate the impact of corporate administration by Corporate
Governance and external monitoring on the earning management in UAE. The research was
conducted to know about the fact that whether these two factors compels earning
management hones in UAE or not (El Bodan, Aga and Alrub, 2017).
Question
Following research question is studied by this article:
Whether the administration of Corporate Governance and external audit monitoring impact or
influence the EA in financial institutions of UAE?
Methodology
A statistical methodology is been used in order to develop a hypothetical association between
each element of Corporate Governance and External Audit on the variables of Earning
Management. A quantitative approach is been used in this article to investigate the impact of
CG’s framework and strict rules and regulations of external audit on the functions of EA.
Sets of independent companies listed on ADX are been used along with the discretionary
accruals. A deep data analysis is been done for the above events to find the earning
management (El Bodan, Aga and Alrub, 2017).
In the research, variables are examined using generalized linear models (GLM) and samples
are taken as the firms listed on Dubai Financial Market, Abu Dhabi Securities Market and
Central Bank of UAE. Selection of the firms was depend on the secondary data available and
presented in their annual reports. The sample size of the study was limited to fifty firms.
Furthermore, to study the relation between proposed variables, additional data was extracted
from the official website of each selected company. The other method used for selecting the

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sample size was to measure the confidence level index of each firm. The criteria set for the
same was 95% of the confidence level with the population size of 500 (El Bodan, Aga and
Alrub, 2017).
The data taken was for the time period of five years that is from 2011 to 2015. In order to
measure the accruals, a statistical approach given by J.J Jones (1991) was used which was
different from other models. It expressed non discretional accrual in a form of mathematical
equation which is as follows:
NDA it = α (1 / TA it -1) + β1 (Δ REV it / TA it -1) + β 2 (PPE it / TA it -1) (El Bodan, Aga
and Alrub, 2017).
Findings and recommendations
By using the Karl Pearson’s coefficient of correlation, the findings of the study are listed and
then the recommendations were given. Empirical results were driven by Linear regression
analysis which is a statistical tool used for establishing the dependent variables with
developing its relationships with various independent variables. Following are the findings of
the study:
 As per the table generated by GLM, Discretionary accruals has a negative impact of
the coefficient of CEO duality and activity of the board at 5% level of significance.
 Accruals has a positive effect of owner structure and size of board at 5% level of
significance.
 As the number of owner structure increases, discretionary accruals also increases by
0.9256% in UAE.
 It was also found that at higher managerial ownership levels, monitoring tends to be
weaker. As a result of which, there is a positive association between the variable of
managerial ownership and earnings management (El Bodan, Aga and Alrub, 2017).

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 An increase in CEO duality will lead to decrease in accruals by 2.8775% and the
increase in board activity will reduce the discretionary accruals by 1.16595%.
The overall conclusion of the study was that rise in CEO duality and board activity has a
negative impact on EM in UAE whereas the ownership structure and size of board has
positive effect on accruals.
It was recommended in the study that it is good not to consider non-financial organizations
because of their limited insights. Also the data taken from annual report was confined to the
financial year 2015 only. It was also recommended that further research on the same subject
can take place by determining the appropriate number of board of directors in the firm so that
effective decisions can be taken (El Bodan, Aga and Alrub, 2017).
Comment
The article was easy to understand as it has used the statistical tools in such a manner that a
reader can easily understand and analysis what is written in the article. Moreover,
calculations were shown properly and are interpreted in a simple language.
Article 2
Financial Reporting Council of Nigeria and the Future of Accounting Profession in
Nigeria.
In this article, qualitative approach is been used which means non-numeric data is analysed
and suggestions were made in respect of future of accounting profession in the place like
Nigeria.
Aim
The article aims at investigating the significance of corporate financial reporting and
analysing the future of accounting profession in Nigeria.

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Objective
The objective or goal of this article is to address the challenges which defines the future of
accounting in Nigeria. It also focuses on the activities of Financial Reporting Council (FRC)
performed in respect of the Nigerian accounting profession and practice, the reason for which
the act was designed (Herbert, et al., 2016).
Question
The problem statement of this article is to assess and study the structural attributes and
consequences of FRC Act. Along with this, to check the future of accounting as a profession,
specifically in Nigeria.
Methodology
Each and every section in the article is properly observed starting from explaining accounting
as profession to observing Financial Reporting Council of Nigeria and future of this
profession in Nigeria. The challenges and threat to accounting future are thoroughly observed
as well as the upshots of FRC act in Nigeria are clearly mentioned in the article. So, basically
a proper observation of all the aspects are been done in order to carry out the research
(Herbert, et al., 2016).
Findings and recommendations
In a concise manner, accounting profession’s work is important for protecting the interest of
investors which makes this task public interest oriented. The necessity of public trust and
maintaining it is increased after the recent accounting scandals and financial crisis. In
addition this, it is also suggested in the article that the history of a profession like accounting
is characterized by the expectation gaps in auditing. In that explanation, the article stated that
Financial Reporting Council (FRC) Act No 6, 2011 came into effect and revoked the

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Nigerian Accounting Standard Board (NASB) Act and replaced with the new set of rules and
regulations.
In addition to that, the article also explained some challenges and threats to the futurity of
accounting, especially in Nigeria. The article listed out 12 critical challenges faced by the
profession and are presented in summarized form. One of the challenge was the demand by
the public audit committees for a level of certainty and precision in unrealistic audits.
Another challenge was setting up the achievable goals and figuring out the fact that how
financial reporting will look like in future. Other issues were related to licensing of
profession and changing the current regime. Some threats were also mentioned in the article
such as globalization, issues in accepting IFRS, generational gap, duplicate regulation and
many more (Herbert, et al., 2016).
As per FRCN Act, there were various upshots such as registration of profession and
discipline of profession. The act also requires the management of internal control which
include information systems control with independent attestation. The last upshots of the act
were practice review of the accountants and timely monitoring and inspecting the activities of
NASB. Overall it was expected that FRC will restore the image of accounting profession in
Nigeria by properly and effectively implementing the provisions of the act. The article
concluded that with the provisions of FRC Act, the council is expected to integrate the
accounting profession and strengthen it. Along with this, the extent of reliability and
confidence in financial reporting must also increase (Herbert, et al., 2016).
Comment
The above article was written in a very descriptive manner and every element related to the
subject is properly observed -and explained in fully detail. However, it was bit difficult to

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understand the content but overall the article was good and was written in a systematic
manner.
Article 3
Corporate Social Responsibility and Financial Performance: The Case of Safaricom
Ltd.
Aim
The aim of the article is to study the relation between CSR and financial performance of
Safaricom Ltd.
Objective
 During the period of 2009-2017, to study the changes in revenue and investment in
CSR of Safaricom.
 To investigate the relation between expenses and net income on CSR of the chosen
company.
 To determine that whether the CSR investment and Earnings per Share (EPS) are
related or not (Nyongesa, 2017).
Question
The problem statement of the article is to investigate the impact of CSR activities on the
financial performance of Safaricom Ltd which is a leading telecommunication company of
Kenya (Nyongesa, 2017).
Methodology
In the whole research, correlation research design is been used for resolving the purpose. The
financial performance of Safaricom Ltd. was analysed by using Excel and SPSS software.

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Secondary data was collected form the audited financial statements of the company and was
analysed by using proper methodology.
As far as literature review is concerned, a systematic review of the literature was done in this
context and the studies conducted by various other researchers and authors were also
critically reviewed. All the findings and suggestions were clearly mentioned in the literature
review part of the research (Nyongesa, 2017).
Findings and recommendations
Mikołajek-Gocejna (2016), conducted an empirical research or analysis for studying the link
between the investment made in CSR by the company and its performance in financial
aspect. The result of this study stated that the investment in sustainable activities has
increased and despite of various findings, majority of them are redirected towards the fact
that there is a positive relationship between CSR activities and financial enactment of the
company. The author used stakeholder and agency theory as core theoretical frameworks.
Friedman (1970), points out that as per agency theory, firms made CSR investment with a
purpose to make best utilization of their resources for increasing profits by operating within
the legal framework. In contrast to it, Freeman (2004) suggested that stakeholder theory in
relation to this, implies that companies are required to keep in mind the interest of its
stakeholders. Such people are highly affected by the operations of the organization which
have a direct impact on its corporate social performance.
In the same context, another study was conducted by Kakakhel, et al., (2015) which measure
the same relationship for companies in Pakistan engaged in cement manufacturing and
suggested a positive association between CSR and companies’ financial performance. While,
Babalola (2012) conducted the study for the companies listed on Nigerian Stock Exchange
and found a negative link between these two factors. Similarly, another scholar Fauzi (2009),

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done a research in same context and suggested that there was no effect of CSR on the
financial performance. A study by Kamwara, Lyria, and Mbogo (2016), investigated the
association between the expenditure on CSR activities and company’s performance which are
listed on Nairobi Securities Exchange. The result of the study was positive and it stated that
there was a link between organization’s profitability and its CSR activities. Further studies
were also done in the same context and the review of the literature was given in this study.
Their suggestions and findings were also clearly mentioned (Nyongesa, 2017).
Comment
A detailed literature review was given in the article. It clearly stated all the findings of the
researches done in this area and make a deep analysis of all the researches. The subject is
easily understandable and the review was also written in a simple language which is easy to
understand for the users.
Conclusion
From the above report, it is concluded that the articles taken from the International Journal of
Accounting and Finance are totally focused on the aspects of accounts and finance.
Moreover, they are been written in a systematic manner and has followed a standard format
of writing a research paper. Each article has its own objectives and findings as well as the
methodology approach.

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References
El Bodan, M., Aga, M. and Alrub, A.A. (2017). Impact of Corporate Governance and
External Audit on Earning Management. Evidence from the Financial Sector of United Arabs
of Emirates (UAE). International Journal of Finance and Accounting, 6(6), pp.172-178.
Fauzi, H. (2009). Corporate Social Responsibility and Financial Performance: Empirical
Evidence from American Companies. GMJ, 3, Iss. June-2009.
Freeman R.E. (2004). The stakeholder approach revisited, ‘Zeitschrift fuer Wirtschafts-und
Unternehmensethik’, Vol. 5, No. 3.
Friedman M. (1970). The social responsibility of business is to increase its profits. New York
Times Magazine.
Herbert, W.E., Anyahara, I.O., Okoroafor, E.N. and Onyilo, F. (2016). Financial Reporting
Council of Nigeria and the Future of Accounting Profession in Nigeria. International Journal
of Finance and Accounting, 5(3), pp.146-157.
Kakakhel, S. J., Ilyas, M., Iqbal, J., and Afeef, M. (2015). Impact of Corporate Social
Responsibility on Financial Performance: Evidence from Pakistan's Cement Industry. Abasyn
University Journal of Social Sciences, 8(2), pp. 392-404.
Kamwara, Lyria, and Mbogo (2016). Influence of corporate social responsibility on financial
performance of industries listed at Nairobi securities exchange, Kenya. International Journal
of Advanced Multidisciplinary Research, 3(10).
Mikołajek-Gocejna, M. (2016). The Relationship Between Corporate Social Responsibility
And Corporate Financial Performance - Evidence From Empirical Studies. Comparative
Economic Research, 19(4), pp. 67-84.

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Nyongesa, W.R. (2017). Corporate Social Responsibility and Financial Performance: The
Case of Safaricom Ltd. International Journal of Finance and Accounting, 6(6), pp.167-171.