Disclosure of Organizational Ambidexterity Activities and Earnings Quality in Oman
DOI:
https://doi.org/10.26668/businessreview/2023.v8i5.1393Keywords:
Organizational Ambidexterity Dis¬closure, Organizational Ambidexterity, Earnings Quality, Persistence, Value Relevance, OmanAbstract
Purpose: This study examines the association between organizational ambidexterity disclosure (OAD) and earnings quality (EQ) in terms of earnings persistence (PER) and value relevance (VR).
Theoretical framework: Organizational ambidexterity disclosure (OAD) is one type of forward-looking disclosure (FLD) which includes all information about exploration and exploitation activities. In accounting, the study is interested in how (OAD) affects the firm’s earnings quality.
Design/methodology/approach: This study uses the secondary data of non-financial industrial and services firms listed on the Muscat Securities Market (MSX) in Oman for a 5-year period from 2017–2021. The study uses generalized least square (GLS) and feasible general least squares (FGLS) regressions to test the hypotheses and find the results.
Findings: Results of the GLS and the robust results of FGLS show that OAD has a positive and significant effect on earnings persistence (PER) and value relevance (VR) and the coefficient of VR is stronger than the coefficient of PER, indicating the importance of OAD on the earnings quality as new evidence in the area of accounting.
Research Implications: The results provide crucial implications for researchers, investors, policy makers and managers. The study provides potential leverage points for those responsible for shaping the disclosure and transparency because of it insights on when OAD impacts EQ.
Originality/value: This study offers a novel resource-based perspective to explain how Omani firms achieve higher sustainable and value relevance earnings by investing in OA. It also provides new evidence about how an ambidextrous firm improves the sustainable and value relevance earnings.
Downloads
References
Abazeed, R.A.M. (2020). Impact of strategic capabilities on organizational ambidexterity in the commercial banks in Jordan: The mediating role of knowledge management. Management Science Letters, 10(7), 1445–1456
Abu-Musa, A. A. E-S., El-Mehy, A. A. E-F. A. & E-Deeb, M. A. (2021). The Value relevance of forward looking disclosure: A Content analysis of the annual reports of Egyptian listed companies. Contemporary Commercial Studies Journal, 7(11) part (3), 255-293
Al Dulaimi, J. A. A. B. & Kadhim, E. H. (2022) Transparency of Information in the Financial Statements and the Extent to Which It Discloses the Future Expectations of Economic Units Using the Tobin s Q Index. International Journal of Professional Business Review, 7(5), 01-15. doi.org/10.26668/businessreview/2022.v7i5.766
Al Lawati, H. (2022). Politically connected firms and forward-looking disclosure in the era of Oman Vision 2040. Journal of Risk and Financial Management, 15, 233. https://doi.org/10.3390/ jrfm15060233
Al Lawati, H. M. A., & Hussainey, K. (2020). Disclosure of forward-looking information: Does audit committee overlapping matter? International Journal of Accounting, Auditing and Performance Evaluation, forthcoming.
Al Lawati, H., Hussainey, K. & Sagitova, R. (2021). Disclosure quality vis-à-vis disclosure quantity: Does audit committee matter in Omani financial institutions? Review of Quantitative Finance and Accounting 57, 557–94.
Alamayreh, E. M., Sweis, R. J., & Obeidat, B. Y. (2019). The relationship among innovation, organizational ambidexterity and organizational performance. International Journal of Business Innovation and Research, 19(4),554-579.
Al-Najjar, B., & Abed, S. (2014). The association between disclosure of forward-looking information and corporate governance mechanisms: Evidence from the UK before the financial crisis period. Managerial Auditing Journal, 29(7), 578-595. DOI:10.1108/MAJ-01-2014-0986
Al-Shattarat, B. (2021). The consequence of earnings management through discretionary accruals on the value relevance in Saudi Arabia. Cogent Business & Management, 8, (1)1886473, DOI: 10.1080/23311975.2021.1886473
An, Y. (2017). Measuring earnings quality over time. International Journal of Economics and Financial Issues, 7(3), 82-87.
An, Y. (2019). An empirical study on the relationship between foreign investors and earnings quality. Research in World Economy, 10(3), 99-107. https://doi.org/10.5430/rwe.v10n3p99
Athanasakou, V. E., & Hussainey, K. (2014). The perceived credibility of forward-looking performance disclosures. Accounting and Business Research, 44(3), 227-259. DOI: 10.1080/00014788.2013.867403
Aureli, S., Gigli, S. Medei, R. & Supino, E. (2020). The value relevance of environmental, social, and governance disclosure: Evidence from Dow Jones Sustainability World Index listed companies. Corporate Social Responsibility and Environmental Management, 27(1), 43-52. https://doi.org/10.1002/csr.1772.
Bell, L., & Hofmeyr, K. (2021). Enabling organisational ambidexterity: A leadership perspective. South African Journal of Business Management, 52(1), 1-15. a2268. https://doi.org/10.4102/ sajbm.v52i1.2268
Beretta, S. & Bozzolan, S. (2008). Quality versus quantity: the case of forward-looking disclosure. Journal of Accounting, Auditing and Finance, 23(3), 333-376. https://doi.org/10.1177/0148558X0802300304
Black, R., & Nakao, S.H. (2017). Heterogeneity in earnings quality between different classes of companies after IFRS adoption: evidence from Brazil. Accounting & Finance Review (Revista Contabilidade & Finanças), 28(73), 113-131. DOI: 10.1590/1808-057x201702750
Bravo, F. (2016). Forward-looking disclosure and corporate reputation as mechanisms to reduce stock return volatility. Revista de Contabilidad (Spanish Accounting Review), 19, (1), 122-131
Brix, J. (2019). Ambidexterity and organizational learning: revisiting and reconnecting the literatures. The Learning Organization, 26(4), 337-351. https://doi.org/10.1108/TLO-02-2019-0034.
Buertey, S., & Pae, H. (2021). Corporate governance and forward-looking information disclosure: evidence from a developing country. Journal of African Business, 22(3),293-308
Cao, Q., Gedajlovic, E., & Zhang, H. (2009). Unpacking organizational ambidexterity: dimensions, contingencies, and synergistic effects. Organization Science, 20(4), 781-796 DOI:10.1287/orsc.1090.0426
Charumathi, B., & Ramesh, L. (2015). On the determinants of forward looking disclosures by Indian companies. Indian Journal of Accounting, XLVII (1), 25-37.
Cho, H., Lee, P., & Shin, C.H. (2019). Becoming a sustainable organization: focusing on process, administrative innovation and human resource practices. Sustainability, 11(13), 3554. https://doi.org/10.3390/su11133554.
Christofi, M., Vrontis, D. J. & Cadogan, W. (2021). Microfoundational ambidexterity and multinational enterprises: A systematic review and a conceptual framework. International Business Review, 30(1),101625
Claudia, O. & Mihaela, H. (2019). Ambidexterity- A new paradigm for organization facing complexity. Studies in Business and Economics, 14(3), 145-159.
Clauss, Th., Kraus, S. Kallinger, F. L., Bican, P. M., Brem A., & Kailer, N. (2021) Organizational ambidexterity and competitive advantage: The role of strategic agility in the exploration-exploitation paradox. Journal of Innovation & Knowledge, 6, 203–213. doi.org/10.1016/j.jik.2020.07.003
Dechow, P., Ge, W., & Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2-3), 344-401. https://doi.org/10.1016/j.jacceco.2010.09.001
Dey, P. K., Roy, M., & Akter, M. (2020) What determines forward-looking information disclosure in Bangladesh? Asian Journal of Accounting Research, 5(2), 225-239 DOI 10.1108/AJAR-03-2020-0014
Farichah, F. (2017). Relationship of earnings management and earnings quality before and after IFRS implementation in Indonesia. European Research Studies Journal, XX (4B), 70 – 81
Francis, J., & Schipper, K. (1999). Have financial statements lost their relevance? Journal of Accounting Research, 37(2), 319–352. https://doi.org/10.2307/2491412
Francis, J., LaFond, R., Olsson, P. M., & Schipper, K. (2004). Costs of equity and earnings attributes,” The Accounting Review, 79(4), 967-1010. https://doi.org/10.2308/accr.2004.79.4.967
Fu, N. P., Flood, C. & Morris, T. (2016). Organizational ambidexterity and professional firm performance: the moderating role of organizational capital. Journal of Professions and Organization, 3(1), 1–16 doi: 10.1093/jpo/jov010
Gianzina-Kassotaki, O. (2017). Leadership and ambidexterity: A multilevel analysis of the aerospace and defense organizations [Dissertation]. Warwick Business School. http://wrap.warwick. ac.uk/95904/1/WRAP_Theses_Gianzina-Kassotaki_2017.pdf (25 July 2022)
Gibson, C., & Birkinshaw, J. (2004). Building ambidexterity into an organization. MIT Sloan Management Review, 45(4), 47-55.
Hahn, T., Pinkse, J., Preuss, L., & Figge, F. (2016). Ambidexterity for corporate social performance,” Organization Studies, 37(2), 213–235
Hameedi. K. S., Union. A. H., Talab. H. R., Almagtome .A. H. (2022). IFRS adoption, cost of equity and firm value: evidence from Iraq. International Journal of Professional Business Review, 7(3),01-14. doi.org/10.26668/businessreview/2022.v7i3.0602
He, Z-L., & Wong, P-K. (2004). Exploration vs. Exploitation: An empirical test of the ambidexterity hypothesis. Organization Science, 15(4), 481-494. DOI 10. 1287/orsc. 1040.0078
Hussainey, K., & Mouselli, S. (2010). Disclosure quality and stock returns in the UK. Journal of Applied Accounting Research,11(2), 154-174 DOI 10.1108/09675421011069513
Irwandi, S. A., & Pamungkas, I. D. (2020). Determinants of financial reporting quality: Evidence from Indonesia Journal of International Studies, 13(2), 25-33. doi:10.14254/2071-8330.2020/13-2/2
Ito, T. (2022). Organizational ambidexterity and firm performance: Effect of two types of exploitation on Japanese video game industry. Journal of Digital Life, 2(7), 1-10.
Kassotaki, O. (2022). Review of organizational ambidexterity research. SAGE Open January-March, 1– 22. DOI: 10.1177/21582440221082127
Khankahdani, M.F., Taftiyan, A., & Ardakani, M.N. (2021). Ranking of indicators of forward-looking information disclosure by the fuzzy analytical hierarchy process. International Journal of Finance and Managerial Accounting, 6(21), 111-127.
Kılıç, M., & Kuzey, C. (2018). Determinants of forward-looking disclosures in integrated reporting. Managerial Auditing Journal, 33(1), 115-144 DOI 10.1108/MAJ-12-2016-1498
Koryak, O., Lockettb,A., Haytonb, J., Nicolaoub, N., & Moleb, K. (2018). Disentangling the antecedents of ambidexterity: Exploration and Exploitation. Research Policy, 47(2), 413–427
Kouki, A. (2018). IFRS and value relevance: A comparison approach before and after IFR Sconversion in the European countries. Journal of Applied Accounting Research, 19 (1), 60-80, https://doi.org/10.1108/JAAR-05-2015-0041
Lastra, F-P. d. l., García-Carbonell, S. N. Martín-Alcázar, F., & Sánchez-Gardey, G. (2017). Building ambidextrous organizations through intellectual capital: A proposal for a multilevel model. Intangible Capital, 13(3), 668-693
Leal, L. T. Y., Girão, L. F. D. P., Lucena, W. G. L., & Martins, V. G. (2017). Persistence, value relevance, and accruals quality in extreme earnings and cash flow situations. Mackenzie Management Review, 18(3), 203-231 http://dx.doi.org/10.1590/1678-69712017/administracao.v18n3p203-231
Lis, A., Józefowicz, B., Tomanek, M., & Gulak-Lipka, P. (2018). The Concept of the ambidextrous organization: systematic literature review. International Journal of Contemporary Management, 17(1), 77-97. doi:10.4467/24498939IJCM.18.005.8384
Longoni, A., & Cagliano, R. (2016). Environmental and social sustainability priorities. International Journal of Operations & Production Management, 35(2), 216-245. DOI:10.1108/IJOPM-04-2013-0182
Lopez‑Sanchez, J.A., & Santos‑Vijande, M. L. (2022). Key capabilities for frugal innovation in developed economies: insights into the current transition towards sustainability,” Sustainability Science, (17), 191–207 doi.org/10.1007/s11625-021-01071-1
Luger, J., Raisch, S., & Schimmer, M. (2018). Dynamic balancing of exploration and exploitation: The contingent benefits of ambidexterity. Organization Science, 29(3), 449-470 DOI:10.1287/orsc.2017.1189
Luo, C., Zhang, D., Luo, B., & Ge, J. (2017). Ambidextrous strategy and firm performance: The moderating effects of organizational slack and organizational life cycle. Business and Management Studies, 3(4), 1-11.
Lyimo, G. D. (2014). Assessing the measures of quality of earnings from India. European Journal of Accounting Auditing and Finance Research, 2(6), 17-28.
Maine, J. E., Samuelsson, F., & Uman, T. (2022). Ambidextrous sustainability, organizational structure and performance in hybrid organizations. Accounting, Auditing & Accountability Journal, 35(3), 734-769. DOI 10.1108/AAAJ-12-2019-4338
March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.
Menicucci, E. (2020). Earnings quality: Definitions, measures, and financial reporting. 1st edition, Palgrave Pivot Publisher. UK.
Mirzajani, J., & Heidarpoor, F. (2018). Income smoothing, investor reaction and earnings persistence. International Journal of Finance and Managerial Accounting, 3(11), 23-31.
Mutisya, P. M., K’Obonyo, P., Ogollah, K. J., & Njihia, M. (2020). Organizational ambidexterity and performance of large manufacturing firms in Kenya. DBA Africa Management Review, 10(5), 23-36.
Nelwan, M.L., Simatupang, C., & Tansuria, B.I. (2020). Value relevance of accounting information in the Presence of Earnings Management. Jurnal Reviu Akuntansi dan Keuangan, 10(2),321- 334. doi.org/10.22219/jrak.v10i2.11856
Nwaigwe, N. G., Ofoegbu, G. N., Dibia, N. O. & Nwaogwugwu, C. V. (2022). Sustainability disclosure: Impact of its extent and quality on value of listed firms in Nigeria. Cogent Business & Management, 9(1), 2079393, DOI: 10.1080/23311975.2022.2079393
O’Reilly, C. A., & Tushman, M. L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in Organizational Behavior, 28, 185–206.
O'Cass, A., Heirati, N., & Ngo, L. V. (2014). Achieving new product success via the synchronization of exploration and exploitation across multiple levels and functional areas. Industrial Marketing Management, 43(5), 862-872;
Peng, M.Y-P., Lin, K-H., Peng, D. L., & Chen, P. (2019). Linking organizational ambidexterity and performance: The drivers of sustainability in High-Tech firms. Sustainability, 11, 3931; doi:10.3390/su11143931
Penman, S., & Zhang, X. J. (2002). Accounting conservatism, the quality of earnings and stock returns. The Accounting Review, 77(2), 237-264. https://www.jstor.org/stable/3068897
Perotti, P., & Wagenhofer, A. (2014). Earnings quality measures and excess returns,” Journal of Business Finance & Accounting, 41(5) & (6), 545-571. https://doi.org/10.1111/jbfa.12071
Popadić, M., Černe, M., & Milohnić, I. (2015). Organizational ambidexterity, exploration, exploitation and firms innovation performance. Organizacija, 48(2), 112-119. DOI: 10.1515/orga-2015-0006
Prange, C., & Verdier, S. (2011). Dynamic capabilities, internationalization processes and performance. Journal World Business, 46(1), 126–133.
Preda, G. (2014). Organizational ambidexterity and competitive advantages: Toward a research model. Management & Marketing, XII (1), 67-74
Raisch, S., Birkinshaw, J., Probst, G. & Tushman, M. L. (2009). Organizational ambidexterity: balancing exploitation and exploration for sustained performance. Organization Science, 20(4), 685–695 doi 10.1287/orsc.1090.0428
Serra, S., Lemos, K. M., & Matins, M. S. (2022). The Influence of the Board of Directors and the Auditor in the Disclosure of Derivative Financial Instruments: Evidence on Portuguese Capital Market. International Journal of Professional Business Review,791), 01-28 doi.org/10.26668/businessreview/2022.v7i1.240
Soares, J. L., Reis, D. R. dos., Cunha, J. C. da., & Neto, P. J. S. (2018). Organizational ambidexterity: A study in Brazilian higher education institutions. Journal of Technology Management & Innovation, 13(3), 36-46.
Šodan, S. (2015). The Impact of fair value accounting on earnings quality in eastern european countries. Procedia Economics and Finance, 32, 1769-1786
Tamayo-Torres, J., Roehrich, J.K., & Lewis, M.A. (2017). Ambidexterity, performance and environmental dynamism. International Journal of Operations & Production Management, 37(3), 282-299. https://doi.org/10.1108/IJOPM-06-2015-0378
Tuan, L.T. (2016). Organizational ambidexterity, entrepreneurial orientation, and I-Deals: The moderating role of CSR. Journal of Business Ethics, 135(1), 145–159 DOI 10.1007/s10551-014-2476-1
Utami, W. & Wahyuni, P. D. (2018). Forward-looking information based on integrated reporting perspective: Value relevance study in Indonesia stock exchanges. Asian Journal of Economics, Business and Accounting, 8(4), 1-12. DOI: 10.9734/AJEBA/2018/44981
Utami, W., Wahyuni, P. D. & Nugroho, L. (2020). Determinants of stock liquidity: Forward-looking information, corporate governance, and asymmetric information. Journal of Asian Finance, Economics and Business, 7(12), 795–807 .doi:10.13106/jafeb.2020.vol7.no12.795
Vo, X. V., & Chu, T. K. H. (2019). Do foreign shareholders improve corporate earnings quality in emerging markets? Evidence from Vietnam. Cogent Economics & Finance, Economics & Finance, 7, 1698940. https://doi.org/10.1080/23322039.2019.1698940
Weigel, C., Derfuss, K. & Hiebl, M. R. W. (2022).Financial managers and organizational ambidexterity in the German Mittelstand: the moderating role of strategy Involvement. Review of Managerial Science https://doi.org/10.1007/s11846-022-00534-8
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Mawih Kareem AL Ani, Hidaya Mustafa Al-Lawati , Musallam Mohammed AL Amri

This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Authors who publish in this journal agree to the following terms: the author(s) authorize(s) the publication of the text in the journal;
The author(s) ensure(s) that the contribution is original and unpublished and that it is not in the process of evaluation by another journal;
The journal is not responsible for the views, ideas and concepts presented in articles, and these are the sole responsibility of the author(s);
The publishers reserve the right to make textual adjustments and adapt texts to meet with publication standards.
Authors retain copyright and grant the journal the right to first publication, with the work simultaneously licensed under the Creative Commons Atribuição NãoComercial 4.0 (http://creativecommons.org/licenses/by-nc/4.0/), which allows the work to be shared with recognized authorship and initial publication in this journal.
Authors are allowed to assume additional contracts separately, for non-exclusive distribution of the version of the work published in this journal (e.g. publish in institutional repository or as a book chapter), with recognition of authorship and initial publication in this journal.
Authors are allowed and are encouraged to publish and distribute their work online (e.g. in institutional repositories or on a personal web page) at any point before or during the editorial process, as this can generate positive effects, as well as increase the impact and citations of the published work (see the effect of Free Access) at http://opcit.eprints.org/oacitation-biblio.html