Corporate Governance Effectiveness and Premature Revenue Recognition: The Moderating Role of Family Ownership

Abstract

This study analyzes the relationship between corporate governance effectiveness (CGEF) and premature revenue recognition (PRR) in a sample of 160 Jordanian industrial firms over the 2017–2021 period. We measure the effectiveness of corporate governance through three sub-variables; board size, CEO duality and audit committee. We found that CEO duality and audit committee have negative and significant relationships with PRR, while board size has an insignificant association with PRR. As for corporate governance effectiveness, the results reveal that corporate governance effectiveness contributes to reducing premature revenue recognition, in addition to the fact that family ownership plays a positive vital role as a moderating variable in enhancing the role of corporate governance in reducing premature revenue recognition. Thus, the study recommends Jordanian authorities, policy-makers and regulation setters to urge firms to preserve a high level of corporate governance effectiveness due to its role in preventing premature revenue recognition.