Do CEO characteristics impact the decision to hire external auditor with forensic accounting competencies? Evidence from Jordanian listed companies

Hashem Alshurafat, Husam Ananzeh, Jebreel Mohammad Al-Msiedeen and Claire Beattie

Journal of Business and Socio-economic Development, 2025, vol. 6, issue 2, 191-208

Abstract: PurposeThis paper aims to analyze whether chief executive officer (CEO) characteristics are linked with corporate decisions to hire external auditors with forensic accounting skills.Design/methodology/approachThe research explores how attributes such as CEO education, compensation, age and duality influence this corporate governance decision. Adopting an integrated theoretical framework of upper echelon theory and resource dependence theory, this study utilizes logit and probit regression models to analyze data from 71 companies listed on the Amman Stock Exchange (ASE). Data were collected from published annual reports for six fiscal years from 2017 to 2022.FindingsThe findings reveal that CEO education, compensation and age significantly impact the likelihood of appointing external auditors with forensic accounting expertise. Specifically, higher educational qualifications, greater compensation and older age are positively associated with this decision. However, CEO duality does not show a significant influence.Research limitations/implicationsThe study’s scope is limited to firms listed on the ASE, which may affect the generalizability of the findings. Future research could expand to other regions and adopt longitudinal designs to provide a more comprehensive understanding of these relationships.Social implicationsRegulators and policymakers should consider the role of CEO attributes in enhanced financial transparency and accountability. Highly qualified executives may improve fraud detection and minimize financial risk. Corporate governance codes could also align executive profiles with risk management strategies.Originality/valueThis study contributes to the literature by providing empirical evidence on the influence of CEO characteristics on the adoption of forensic accounting services in a developing market context. It highlights the role of leadership attributes in shaping corporate governance practices and reinforces the need for firms to consider these attributes in their decision-making processes.

Keywords: Forensic accounting; CEO characteristics; External auditors; Logit regression; Probit regression; Jordan (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jbsedp:jbsed-01-2025-0014

DOI: 10.1108/JBSED-01-2025-0014

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