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Rabab’ah, Mwafag, Omar Al-Sir, and Ali A. Alzoubi. "The Impact of the Audit Committees' Properties on the Quality of the Information in the Banking Financial Reports: A Survey on Saudi Commercial Banks." International Business Research 10, no. 11 (October 18, 2017): 175. http://dx.doi.org/10.5539/ibr.v10n11p175.
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This study aims to identify the impact of the audit committees' properties on the quality of the information of the banking financial reports in the Saudi commercial banks by identifying the effect of identifying tasks and duties, independence, accounting and banking experience and efficiency of the audit committee on achieving the quality of the Saudi banking and financial reports. 110 questionnaires were distributed on the research sample and 105 questionnaires were received and analyzed through ANOVA. Results indicate that the availability of the audit committees' properties affect increasing the quality of the financial reports in the Saudi banking at the level of properties as a whole where the (P) probable value was (0.000 ), which is less than 0.05. It represents the functions and duties of the audit committee, the committee's independence in banks, the availability of the accounting and banking experience for the members of the audit committee and the efficiency of the audit committees at banks. The study recommends more emphasis on the diversity of the experiences of the members of the audit team and thus; the committee can performs its functions in a more efficient and effective way.
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Yustrida Bernawati, Paradisa Sukma,. "The Impact of Audit Committe Characteristics on Audit Quality." Jurnal Akuntansi 23, no. 3 (January 20, 2020): 363. http://dx.doi.org/10.24912/ja.v23i3.602.
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This research was conducted to investigate the effect of audit committee characteristics on audit quality. The characteristics of the audit committee used in this study are the number of audit committees, number of audit committee meetings, audit committee education background, and audit committee experience while audit quality is measured using audit fees. This study uses manufacturing companies listed on the Indonesia Stock Exchange in 2016 - 2018 with 70 observation data and uses OLS regression. The results of this study indicate all four Audit Characteristics, only size and experience significantly influence audit quality. While audit meetings and education do not significantly affect audit quality. Likewise with the education that can not ensure the capabilities possessed by members of the audit committee. Overall, the effectiveness of the audit committee has no significant effect on audit quality.
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Li, Chengai, Lin Pan, and Meilan Chen. "The Overseas Experience of Audit Committee and Audit Fees: Empirical Evidence from China." Complexity 2021 (July 14, 2021): 1–16. http://dx.doi.org/10.1155/2021/5454418.
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The complexity of audit committee experience, including the overseas experience, has an important impact on corporate governance. In this paper, we study the impact of the overseas experiences of the members of audit committee on audit fees. Our empirical analysis and results show that the audit committee overseas experience can significantly increase audit fees. Further, the positive influence of the audit committee overseas experience on audit fees is more pronounced in state-owned enterprises and regions with weak marketization. In addition, we divide the overseas experience into overseas learning experience and overseas working experience. We find that both types of experience present in the audit committee significantly increase the audit fees. Finally, we find that the audit committee overseas experience can significantly improve the quality of accounting information and play a positive role in corporate governance.
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Mnif Sellami, Yosra, and Imen Cherif. "Female audit committee directorship and audit fees." Managerial Auditing Journal 35, no. 3 (January 20, 2020): 398–428. http://dx.doi.org/10.1108/maj-12-2018-2121.
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Purpose The purpose of this paper is to examine the association between female audit committee representation and audit fees, taking into account their demographic attributes. Design/methodology/approach Research hypotheses have been tested by performing both univariate and multivariate analyses based on a sample of 790 firm-year observations from Swedish listed firms, spanning the period 2013-2017. Findings Initial finding derived from the empirical analyses provides consistent evidence of a positive association between female audit committee representation and audit fees. Controlling for self-selection bias, this finding holds unchanged. Therefore, female directors are voluntarily appointed to the companies audit committees. Including demographic attributes of women directors sitting in audit committees in the audit fees, models show that increased audit fees is driven by the level of female directors’ professional experience rather than their mere representation. Results from supplementary analysis document that the positive relationship between female audit committee representation and audit fees is more pronounced when the partner in charge of the audit engagement is a female, indicating that women presence on both the demand and supply-side of audit pricing enhance audit quality more importantly than when women are present on only the demand-side position of audit fees. Originality/value This study extends beyond recently published literature on the relation between audit committee gender-diversity and audit fees by offering a novel insight on demographic attributes of female directors enabling them to demand higher quality audits, as reflected by increased audit fees.
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DeZoort, F. Todd, and Steven E. Salterio. "The Effects of Corporate Governance Experience and Financial-Reporting and Audit Knowledge on Audit Committee Members' Judgments." AUDITING: A Journal of Practice & Theory 20, no. 2 (September 1, 2001): 31–47. http://dx.doi.org/10.2308/aud.2001.20.2.31.
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Interest in audit committees as part of overall corporate governance has increased dramatically in recent years, with a specific emphasis on member independence, experience, and knowledge. This paper reports the results of a study investigating whether audit committee members' corporate governance experience and financial-reporting and audit knowledge affect their judgments in auditor-corporate management conflict situations. A sample of 68 audit committee members completed an accounting policy dispute case and several knowledge and ability tests. The results indicate that, as expected, greater independent director experience and greater audit knowledge was associated with higher audit committee member support for an auditor who advocated a “substance over form” approach in the dispute with client management. Conversely, concurrent experience as a board director and a senior member of management was associated with increased support for management. Collectively, these findings have a number of implications for practice and research. The results provide justification for calls that audit committees be composed completely of independent directors. The results also support auditor concerns that varying knowledge levels lead to systematic differences in audit committee member judgments in disputes between auditors and management.
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Zarza Herranz, César, Felix Lopez-Iturriaga, and Nuria Reguera-Alvarado. "Audit committee expertise in large European firms." Managerial Auditing Journal 35, no. 9 (November 26, 2020): 1313–41. http://dx.doi.org/10.1108/maj-11-2019-2478.
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Purpose This paper aims to study how audit committee member expertise is related to certain features of the committee and to the audit process. Design/methodology/approach Based on information from 2,477 directors from 296 firms in eight European countries between 2005 and 2014, this study measures average audit committee expertise using a continuous variable, which combines education-based and experience-based expertise. Different measures of the audit process are then regressed against this and other control variables. Findings Average committee expertise has increased in recent years. Education-based and experience-based expertise seem to be complementary. Results also show that committees with greater expertise meet more frequently, have fewer directors with full-time dedication and pay lower audit fees. There is no link to changes in the external firm audit, which may be due to mandatory auditor rotation. Originality/value The paper provides a comprehensive metric of audit committee expertise that includes directors’ academic background, professional experience and qualifications. In addition, this study expands current knowledge concerning whether and how committee expertise affects the audit process.
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Sultana, Nigar, Harjinder Singh, and Asheq Rahman. "Experience of Audit Committee Members and Audit Quality." European Accounting Review 28, no. 5 (January 26, 2019): 947–75. http://dx.doi.org/10.1080/09638180.2019.1569543.
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Qeshta, Dr Mohammed Helmy. "Audit Committee Characteristics and Firm Performance: Evidence from the Insurance Sector in Bahrain." Revista Gestão Inovação e Tecnologias 11, no. 2 (June 5, 2021): 1666–80. http://dx.doi.org/10.47059/revistageintec.v11i2.1789.
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This study examines the impact of the Audit Committee's characteristics on the performance of the five insurance companies listed on the Bahrain Burse over the period from 2012 to 2019. This study uses four board characteristics indicators; the size of the audit committee, independence of the audit committee, frequency of meetings of the audit committee, and expertise of the audit committee. Besides, this study takes into account two control variables, such as company size and firm age. Three-panel models used with a different dependent variable for each one were used in this study. The results of the study showed a statistically significant negative relationship between meetings of the audit committee and performance. The size of the audit committee, the independence of the audit committee and the experience of the audit committee have no significant association with the performance of the insurance companies listed on the Bahrain Stock Exchange. Alternatively, other AC features, different from those examined in this work, can be examined in future studies, such as the financial experience of its chair, the tenure of the committee and family ownership.
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Al Naim, Fahad, and Thamir Al Barrak. "The Role of Audit Committees in Limiting Earnings Management: An Empirical Study of Saudi Corporations." Humanities and Management Sciences - Scientific Journal of King Faisal University 22, no. 2 (2021): 1–9. http://dx.doi.org/10.37575/h/mng/0093.
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This study aims to measure the impact that audit committees have on earnings management for companies listed on Tadawul Stock Exchange. The sample includes firms in the basic materials sector for the years 2017 and 2018. The modified Jones model is used to investigate the impact of audit committee characteristics (independence, financial expertise, size, number of meetings, and percentage of shares owned) on earnings management. The results show that the greater the audit committee’s independence, percentage of shares owned, and number of meetings held contribute to limited earnings management. However, no evidence is found to support that financial experience or audit committee size have an impact on earnings management.
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Sylvia Veronica Siregar, Delfita Siagian,. "The Effect of Audit Committee Financial Expertise And Relative Status On Earnings Management: Case of Indonesia." Jurnal Akuntansi 22, no. 3 (November 7, 2018): 321. http://dx.doi.org/10.24912/ja.v22i3.391.
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The aim of this research is to examine the effect of audit committee financial expertise (measured by audit committee experience in accounting, supervision, and financial)and audit committee status (relative to management) on earnings management. Our samples consist of 384 observations in Indonesia Stock Exchange for the year 2012-2014. The result of this research shows that audit commite financial expertise has no significant effect on earnings management. However, we find evidence that audit committee financial expertise haspositive effect on income decreasing accruals. This finding indicates that audit committee may perceived that conservatism is one of the mechanism to restrict management opportunistic behavior. We do not find significant evidence of the joint effect of audit committee status and audit committeee expertise on earnings management.
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Van der Zahn, Mitchell, and Inderpal Singh. "Voluntary decisions on audit committee composition and expertise and the influence of board of director characteristics: Further evidence from Singapore." Corporate Board role duties and composition 1, no. 2 (2005): 49–65. http://dx.doi.org/10.22495/cbv1i2art4.
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Our study empirically examines the association between four board of director characteristics and two audit committee dimensions. The audit committee dimensions are the level to which Singapore publicly listed firms voluntarily (1) include more independent directors on their audit committee beyond the mandatory minimum majority of independent directors and (2) improve the collective knowledge and experience of this standing committee by including suitably qualified independent directors. Our analysis is based on hand collected data from 430 domestically incorporated firms listed on the Singapore Stock Exchange (SGX) at the end of 2003. We find Singapore publicly traded firms are likely to voluntarily include more independent directors on their audit committees beyond the mandated minimum majority when (1) the size of the board of directors increases, (2) firms segregate the positions of Chief Executive Officer (CEO) and Chairperson of the board, and (3) the proportion of independent directors serving on the board of directors increases. The percentage of independent directors with directorate interlocks appears not to influence a firm’s decision to voluntarily include more independent directors on their audit committees. We also find a statistically significant association between (1) duality (negative) and (2) percentage of independent directors with directorate interlocks (positive) and propensity for Singapore firms to voluntarily increase the collective knowledge and experience of the audit committee’s independent directors. Contrary to expectations board size and the proportion of independent directors are not significant determinants.
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Ittonen, Kim, Emma-Riikka Myllymäki, and Per Christen Tronnes. "Banks’ audit committees, audit firm alumni and fees paid to audit firm." Managerial Auditing Journal 34, no. 7 (July 1, 2019): 783–807. http://dx.doi.org/10.1108/maj-01-2018-1766.
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Purpose This paper focuses on bank audit committees and examines whether audit committee members who are former auditors are associated with the acquisition of audit and non-audit services from their former employers. Design/methodology/approach The study empirically examines a sample of large banks that are included in the S&P Composite 1500. Findings The paper reports significantly lower audit fees and a higher proportion of non-audit fees to total fees when the audit committee chair is an alumnus of the incumbent audit firm. Moreover, additional analysis reveals that these findings are stronger for banks with more earnings management. Research limitations/implications Overall, the findings indicate that audit firms might consider banks using their alumni as audit committee chairs to be less risky or easier to audit, thus requiring relatively less effort from the auditors. The reduced effort required to audit clients with audit firm alumni on their audit committees then has the effect of reducing the audit fees charged. Alternatively, their auditing experience and cognitive proximity might influence the assessment of the need for auditing or the ability to negotiate lower audit fees on the part of audit firm alumni. Originality/value This paper provides empirical evidence of the association between audit firm alumni in influential positions on an audit committee and fees paid to those audit firms in the banking industry. The findings contribute to the literature by suggesting that banks with affiliated former auditors chairing their audit committees not only have significantly lower audit fees but also a higher proportion is spent on non-audit services.
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Hadden, Linda B., Dana R. Hermanson, and F. Todd DeZoort. "Audit Committees Oversight Of Information Technology Risk." Review of Business Information Systems (RBIS) 7, no. 4 (October 1, 2003): 1–12. http://dx.doi.org/10.19030/rbis.v7i4.4509.
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This exploratory study examines the role of the audit committee in overseeing information technology (IT) risk. We address the degree of audit committee oversight of specific IT risks, as well as factors associated with variations in audit committee IT oversight. Based on responses from 39 audit committee members, we found (1) little audit committee emphasis on oversight of IT risks, (2) audit committees involved with IT oversight focus on more traditional risks (e.g., monitoring), while very little attention is devoted to IT acquisition and implementation, and (3) the amount of IT oversight is positively associated with the responding members auditing experience and prior familiarity with the COBIT model for assessing IT risks. Audit committee independence, diligence, and expertise, company size, and industry were not significantly associated with IT oversight.
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King, Keren, and E. Angela Kerr. "Four years experience of a monthly training committee." Psychiatric Bulletin 18, no. 6 (June 1994): 360–61. http://dx.doi.org/10.1192/pb.18.6.360.
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The remit of our monthly training committee is to facilitate and audit postgraduate training. A clear remit, attention to the organisation and composition of the committee and clear links with other committees have helped us in our aims. Input to the committee from consultants, management and trainees are all essential to the maintenance of high training standards, particularly in a period of rapid change in the health service. The achievements and future plans of the committee are discussed.
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Wu, Julia, Ahsan Habib, and Sidney Weil. "Audit committee effectiveness: A synthesis of the audit committee literature." Corporate Board role duties and composition 8, no. 1 (2012): 15–31. http://dx.doi.org/10.22495/cbv8i1art2.
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The purpose of this paper is to add a meaningful critique to the existing audit committee (AC) literature by providing (i) a critical analysis of the AC literature grounded on agency theory; (ii) a discussion of the emerging new theories of AC, which investigate the people serving on and working with ACs, and (iii) a description of the relationship between these two groups of literature. A number of qualitative AC studies have provided new insights by investigating the actual people serving on and working with audit committees. This review paper summarizes these findings and provides a comparative evaluation with the agency theory-based AC research. This review documents, among others, that the attributes of ACs, as measured by the quantitative literature, have hardly been reflected by qualitative investigation, whereas qualitative analysis of the data contributed by people who have actual experience of ACs questions the fundamental propositions, not only of why ACs exist, but also how they function. This paper provides a cross-examination of the afore-mentioned two paradigms of literature on AC effectiveness and invites corporate scholars to reflect on the differences between the two groups of AC studies.
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Rich, Kevin T., and Jean X. Zhang. "Does Audit Committee Monitoring Matter in the Government Sector? Evidence from Municipal Internal Control Quality." Journal of Governmental & Nonprofit Accounting 3, no. 1 (June 1, 2014): 58–80. http://dx.doi.org/10.2308/ogna-50832.
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ABSTRACT We investigate whether the presence of municipal audit committees is associated with internal control quality in the municipal setting. The evidence shows that only 20 percent of municipalities in our sample voluntarily maintained an audit committee during the sample period of 2001 through 2004. Our results highlight that municipalities with audit committees are associated with fewer internal control problems, which in turn suggests these cities should be less likely to experience future significant financial reporting failures. These results persist in specifications that use econometric procedures to address concerns about self-selection. Overall, our findings suggest that audit committee presence plays an important role in municipal financial oversight.
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Rummell, Janice E., F. Todd DeZoort, and Dana R. Hermanson. "Does Audit Firm Tenure Matter to Audit Committee Members? Evidence from an Accounting Dispute." Accounting Horizons 33, no. 2 (December 1, 2018): 25–41. http://dx.doi.org/10.2308/acch-52346.
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SYNOPSIS This study examines the effects of Big 4 audit firm tenure on audit committee member support for the auditor in an auditor/management dispute over a subjective accounting issue. One hundred eighteen U.S. public company audit committee members participated in an experiment with audit firm tenure (short/long) manipulated randomly between subjects. The results indicate that participants in the long audit firm tenure group provide more support for the auditor in the dispute than participants in the short tenure group. Audit committee support for the auditor is positively related to audit committee member experience and CPA status, as well as perceived management pressure to meet analyst expectations, but negatively related to perceived management experience in financial reporting. Finally, audit committee members' perceptions of audit firm reliability (i.e., credibility and dependability) mediate the audit firm tenure-auditor support relation. Overall, our results suggest enhanced audit committee support for longer-tenured auditors.
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Oktavia, Mari, and Kennardi Tanujaya. "Analisa Faktor-Faktor yang Mempengaruhi Ketepatan Waktu Pelaporan Keuangan Perusahaan yang Terdaftar di Bursa Efek Indonesia." Global Financial Accounting Journal 3, no. 1 (April 25, 2019): 15. http://dx.doi.org/10.37253/gfa.v3i1.433.
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This research investigates factors affecting timeliness of annual corporate financial reporting in Indonesia. The sample of the research is a company listed on Indonesia Stock Exchange (BEI) in 2012-2017. Company size, company profitability, company age, leverage, audit committee independence, member audit committee, audit committee experience, auditor type, audit report, auditor rotation and audit opinion used as variable independent.
The sample of this research includes 335 company on BEI with 1.675 data. Data obtained from financial statement year ended 2012 until 2017 and panel-regression test to examine the study hypotheses.
This reaearch found the average time company needs 120 days for issuing financial report. Variable company age and audit report have significant positive impact on timeliness of financial. Audit committee independent and member audit committee have significant negative impact on timeliness. However variable company size, company profitability, audit committee experience, auditor type, auditor rotation and audit opinion had no effect significant toward timeliness financial report.
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Carcello, Joseph V., and Terry L. Neal. "Audit Committee Characteristics and Auditor Dismissals following “New” Going-Concern Reports." Accounting Review 78, no. 1 (January 1, 2003): 95–117. http://dx.doi.org/10.2308/accr.2003.78.1.95.
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One important role of audit committees is to protect external auditors from dismissal following the issuance of an unfavorable report. We examine auditor dismissals following new going-concern reports that Big 6 firms issued between 1988 and 1999. Our findings suggest that audit committees with greater independence, greater governance expertise, and lower stockholdings are more effective in shielding auditors from dismissal after the issuance of new going-concern reports. In addition, we find that the relation between audit committee independence and auditor protection from dismissal has grown stronger over time. Finally, independent audit committee members experience a significant increase in turnover rate after auditor dismissals. These findings, coupled with those from Carcello and Neal (2000), suggest that when affiliated directors dominate the audit committee, management often can (1) pressure its auditor to issue an unmodified report despite going-concern issues, and (2) dismiss its auditor if the auditor refuses to issue an unmodified report.
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Abernathy, John L., Brooke Beyer, Adi Masli, and Chad M. Stefaniak. "How the Source of Audit Committee Accounting Expertise Influences Financial Reporting Timeliness." Current Issues in Auditing 9, no. 1 (January 1, 2015): P1—P9. http://dx.doi.org/10.2308/ciia-51030.
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SUMMARY This article summarizes “The Association between Characteristics of Audit Committee Accounting Experts, Audit Committee Chairs, and Financial Reporting Timeliness” (Abernathy, Beyer, Masli, and Stefaniak 2014), which investigates the association between audit committee members' accounting expertise and financial reporting timeliness. While we find a positive relation between audit committee accounting expertise and financial reporting timeliness, interestingly, we also find that accounting expertise gained from public accounting experience is associated with more timely financial reporting than accounting expertise gained from CFO experience. We discuss implications of these findings for auditors, companies, and regulators.
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Gaynor, Lisa Milici, Linda S. McDaniel, and Terry L. Neal. "The Effects of Joint Provision and Disclosure of Nonaudit Services on Audit Committee Members' Decisions and Investors' Preferences." Accounting Review 81, no. 4 (July 1, 2006): 873–79. http://dx.doi.org/10.2308/accr.2006.81.4.873.
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Recent corporate governance reforms that require audit committees to pre-approve audit and nonaudit services increase audit committees' accountability to third parties for actual auditor independence and audit quality. Other SEC reforms mandate the disclosure of fees for auditor-provided services and are aimed at influencing investors' perceptions of auditor independence. These fee disclosures also reveal audit committees' pre-approval decisions, enhancing public accountability. Thus, audit committees may be less willing to hire auditors for nonaudit services to avoid fee disclosures, even when joint provision improves audit quality. One hundred experienced corporate directors, responding as audit committee members or investors, participated in an experiment in which we manipulated the effect of the auditor's provision of nonaudit services on audit quality and the fee disclosure requirement. We find that audit committee members are more likely to recommend joint provision if audit quality improves, consistent with investors' preferences. However, unlike investors, committee members are more reluctant to recommend joint provision when public disclosures are required, even at the expense of audit quality. These findings offer evidence about an indirect effect of recent reforms.
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Chariri, Anis, Indira Januarti, and Etna Nur Afri Yuyetta. "Audit Committee Characteristics and Carbon Emission Disclosure." E3S Web of Conferences 73 (2018): 02001. http://dx.doi.org/10.1051/e3sconf/20187302001.
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Business activities have contributed to the increasing level of carbon emissions, which can endanger the environment. Such phenomena have pushed companies to disclose a variety of carbon emission information to show their responsibilities. Thus, this study aims to investigate the influence of audit characteristics (independence, expertise, meetings) on carbon emission disclosure. Data were collected from the Nordic companies, which were registered in the 2015 Carbon Disclosure Project. A total of 105 companies were used as samples for further analysis. A regression model was then employed to analyse the data. The findings showed that all characteristics of audit committees (independent audit committee, audit committee expertise and audit committee meetings) positively affected carbon emission disclosure. This study implies that companies that are interested in disclosing carbon emission information should create more independent members of audit committees whose expertise or experiences are in accounting/finance/risk. The audit committee members should be also actively involved in regular meetings to monitor and evaluate company’s policy on carbon emission disclosure.
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Kachelmeier, Steven J., Stephanie J. Rasmussen, and Jaime J. Schmidt. "When Do Ineffective Audit Committee Members Experience Turnover?" Contemporary Accounting Research 33, no. 1 (July 29, 2015): 228–60. http://dx.doi.org/10.1111/1911-3846.12154.
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Akwenye, Ndeshipewa Johanna, Tia Chata, and Olumide Henrie Benedict. "Establishment of audit committees in government ministries of a developing country." Risk Governance and Control: Financial Markets and Institutions 6, no. 4 (2016): 274–81. http://dx.doi.org/10.22495/rgcv6i4c2art5.
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The underlying study to this paper attempts to establish to what extent audit committees in government ministries in Namibia have been established as a requirement for enhanced quality of service delivery and accountability to taxpayers A qualitative approach was followed, where questionnaires or an interviews were conducted with accounting officers in government ministries. Content and thematic analyses were used to formulate narratives based on the understanding of similarities and differences in respondents’ experiences, views and perceptions. The study shows that from the 17 ministries that responded, only 2 ministries have established audit committees. Confirmatory, there is currently no legislature that makes it mandatory for government ministries in Namibia to establish audit committees within their respective constituencies. There are no formal audit committee terms and references or an audit committee charters are in place. Government ministries in Namibia seem to not have adopted best national and international governance practices with respect to the establishment of audit committees within their ministries. There is a need for a clear guidance as to how audit committees must be established; the composition of the committee members, the terms of office of committee members and remuneration, to mention a few.
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Krishnan, Jagan, and Jong Eun Lee. "Audit Committee Financial Expertise, Litigation Risk, and Corporate Governance." AUDITING: A Journal of Practice & Theory 28, no. 1 (May 1, 2009): 241–61. http://dx.doi.org/10.2308/aud.2009.28.1.241.
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SUMMARY: Recent debates on audit committee financial expertise have focused on “accounting” and “nonaccounting” financial experts. A significant proportion of firms do not appoint accounting financial experts (i.e., persons with specialized accounting/auditing experience) to their audit committees. We examine the determinants of firms' choice of the “audit committee financial experts” for a sample of Fortune 1000 firms. We test the relation between the demand for accounting financial experts (AFEs), potential litigation risk, and corporate governance. We find that firms with higher litigation risk are more likely to have AFEs on their audit committee. However, the association between litigation risk and the likelihood of appointing accounting financial experts occurs for firms with relatively strong governance but not for those with weak governance. Thus, our findings indicate that (1) companies with demand for accounting financial experts—measured by potential litigation risk—seem to be able to secure accounting financial experts, but (2) such benefits only accrue in the presence of otherwise strong corporate governance.
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Anastasia Chi-Chi (PhD), Onuorah, and Imene Oghenefegha Friday. "Corporate Governance and Financial Reporting Quality in Selected Nigerian Company." International Journal of Management Science and Business Administration 2, no. 3 (2014): 7–16. http://dx.doi.org/10.18775/ijmsba.1849-5664-5419.2014.23.1001.
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This paper evaluated the level of performance of some selected companies ranging from commodities, brewery, banking, oil and gas and beverages in terms of corporate governance measure indictors on the firm quality of financial reporting in Nigeria. The data were collected from 2006 to 2015. Econometric analysis were conducted and the result suggests that the correlation among corporate governance indicators of board structure (size-BRDSZ and independence-BRDID), audit quality (audit committee size (ADCMZ), the quality of external audit (EADTQ) as measured by the presence of an auditor among the big-4), board experience (i.e. experience-BRDEX) and financial reporting quality is 93.47%. The independent variables can explain the variation in the FRQDA by 54.29%. There is overall significance among the parameters measuring financial reporting quality as discretionary accruals of firm (FRQDA). Board structure (size-BRDSZ), board experience (experience-BRDEX) and the quality of external audit (EADTQ) have positive impact on the financial reporting quality measured by the discretionary accruals of firm (FRQDA) by 16.01, 0.05 and 2.75. However, independent directors on the board of firm (independence-BRDID) and audit quality (audit committee size (ADCMZ) negatively affect financial reporting quality measured by the discretionary accruals of firm (FRQDA) as much as 0.99 and 20.01. Guarantee Trust Bank Plc. among the five selected companies of study in Nigeria has better performance of financial reporting based on board structure (size-BRDSZ) and audit committee size (ADCMZ). This revealed that there is short run relationship among Audit quality (audit committee size (ADCMZ), and the quality of external audit (EADTQ) as measured by the presence of an auditor among the big-4) and board experience (i.e. experience-BRDEX) have not granger cause FRQDA. It further recommended that greater focus on corporate governance indicators so as to bring about global standard financial reporting in the Nigerian emerging market for investment opportunity.
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Dewi, Krisna, and Indah Anisykurlillah. "Analysis of the Effect of Fraud Pentagon Factors on Fraudulent Financial Statement with Audit Committee as Moderating Variable." Accounting Analysis Journal 10, no. 1 (March 9, 2021): 39–46. http://dx.doi.org/10.15294/aaj.v10i1.44520.
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This study aims to analyze the effect of fraud pentagon on fraudulent financial statements with audit committee as moderating variable. The population of this study was the property, real estate, and construction companies listed on the Indonesia Stock Exchange during 2016-2018. The sampling technique used purposive sampling and obtained 52 companies with 156 units of analysis. The data were analyzed using logistic regression analysis by IBM SPSS Ver.26. The results showed that company growth had a positive effect on fraudulent financial statements. Meanwhile, the effectiveness of supervision, quality of external auditors, the experience of directors, and CEO duality did not affect fraudulent financial statements. Audit committee significantly moderated the effect of company growth, the effectiveness of supervision, and the experience of directors on fraudulent financial statements. However, audit committee did not moderate the effect of quality of external auditors and CEO duality on fraudulent financial statements. This study concludes that the fraudulent financial statements will be higher when the company growth is higher. Audit committee weakens the effect of company growth, the effectiveness of supervision, and the experience of directors on fraudulent financial statements.
Keywords: Fraudulent Financial Statement; Fraud Pentagon; Audit Committee
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Abu Siam, Yousef, Mohammed Idris, and Saleh Al- Okdeh. "The Moderating Role of Family Control on the Relationship between Audit Committee Financial Expertise and Earnings Management." International Journal of Business and Management 13, no. 12 (November 12, 2018): 31. http://dx.doi.org/10.5539/ijbm.v13n12p31.
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The current study offers empirical evidence on the way the family ownership moderates the association that exists between the financial experience of the audit committee and earnings management based on a sample of 44 manufacturing firms that are registered with the Amman Stock Exchange (ASE) from 2012 to 2016. From the results of the study, there is a significant negative association between the financial experience of the audit committee and earnings management. In addition, the study shows a positive interaction of the financial experience of the audit committee and the family ownership on earnings management. This indicates that an increase in the percentage of audit committee members having financial expertise, in order to restrict earnings management, is less likely to be influential in the case of family controlled firms. These results have implications for policy makers and regulatory bodies in Jordan since they highlight the need to improve the good corporate governance practices and attempt to constrain the incidence of earnings management in Jordanian firms.
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Alqatamin, Rateb Mohammad. "Audit Committee Effectiveness and Company Performance: Evidence from Jordan." Accounting and Finance Research 7, no. 2 (January 24, 2018): 48. http://dx.doi.org/10.5430/afr.v7n2p48.
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This paper seeks to investigate the effect of audit committee characteristics on the company’s performance. The sample consists of 165 non-financial companies listed on the Amman Stock Exchange (ASE) over the period 2014-2016. The results of the study show that the audit committee size, independence and gender diversity have a significant positive relationship with firm’s performance, whereas experience and frequency of meetings has an insignificant association. The results of the study could be beneficial for managers and boards in making suitable choices about audit committee characteristics and corporate governance mechanisms to enhance the company’s performance. The study gives policy makers a better understanding of the different characteristics required of an audit committee, for incorporation in future policy preparation to protect the shareholders’ interests. The relationship between audit committee characteristics and company performance is still ambiguous. This study contributes to the literature by identifying the role of audit committee characteristics in company performance, providing evidence for the view that performance is driven by specific audit committee characteristics.
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Qi, Baolei, and Gaoliang Tian. "The Impact Of Audit Committees Personal Characteristics On Earnings Management: Evidence From China." Journal of Applied Business Research (JABR) 28, no. 6 (October 25, 2012): 1331–44. http://dx.doi.org/10.19030/jabr.v28i6.7347.
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This study investigates the influence of audit committees personal characteristics on the firms earnings management behavior using Chinas publicly traded firms during 2004-2010. Overall, our findings suggest that audit committees several personal characteristics, such as age, gender, education level, and working experience, are associated with earnings management, which in turn may affect the quality of financial reporting. The results are robust after controlling the size, independence, meeting frequency of audit committee, and other firm specific characteristics. The results are consistent with the predictions based on the Upper Echelons Theory. The contributions to the earnings management literature and implications for regulators and investors are also discussed.
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Maggy, Maggy, and Patricia Diana. "Internal and External Determinants of Audit Delay: Evidence from Indonesian Manufacturing Companies." Accounting and Finance Review (AFR) Vol. 3 (1) Jan-Mar 2018 3, no. 1 (February 21, 2018): 16–25. http://dx.doi.org/10.35609/afr.2018.3.1(3).
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Objective - This study aims to examine and explain the relationship between a company's internal factors such as profitability, solvency and audit committee, and external factors including complexity and size of public accounting firms, with audit delay. Methodology/Technique - The importance of financial information is, in part, due to its utility for assessment of company performance. Hence, financial information should be produced and reported as quickly as possible each year. Findings - This study finds that manufacturing companies with high debt levels and low profitability experience longer audit delay. Moreover, the results in this study show that debt level is the most influential and significant factor with a positive relationship to audit delay. Novelty - This study shows that profitability, the number of members on an audit committees and public accounting firm (KAP) size all have an insignificant negative relationship with audit delay. Further, complexity has an insignificant positive relationship with audit delay. Type of Paper: Empirical Keywords: Profitability; Debt; Complexity; Audit Committees; Audit Delays. JEL Classification: M42, M41.
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ElHawary, Engy. "Audit committee effectiveness and company performance: Evidence from Egypt." Journal of Governance and Regulation 10, no. 2 (2021): 134–56. http://dx.doi.org/10.22495/jgrv10i2art12.
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The purpose of this paper is to investigate the impact of audit committee characteristics (size, independence, experience, gender diversity, and frequency of meetings) on the company’s financial performance (ROA and ROE) in Egypt. In 2016, the Egyptian Stock Exchange announced a new listing requirement for the audit committee members’ characteristics to enhance its effectiveness. Data are gathered from the board of directors (BOD) and annual reports of the EGX 30 index non-financial listed companies in Egypt for the period of 2016–2018. Data is analyzed by using panel data cross-section data analysis and correlation analysis. The findings reveal that the audit committee size has a significant relationship with ROA only and committee members’ experience is significantly related with ROE only. The other characteristics (independence, meetings, and gender diversity) have no impact on ROA and ROE. Such findings contribute to the literature by providing new understandings regarding the audit committee as a key component of corporate governance and its impact on financial performance. It could also guide and improve the boards’ selection of the audit committee members and gives Egyptian regulators a better understanding of the impact of their latest listing requirements on protecting the shareholders’ interests and increasing their confidence through having transparent financial statements.
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Rasha Abdulrhman Fallatah, Rasha Abdulrhman Fallatah. "The Effect of Audit Committees on the Sustainability of Financial Inclusion Transactions in Saudi Banks in the Light of the Saudi Vision 2030: أثر لجان المراجعة في استدامة الشمول المالي بالمصارف السعودية في إطار رؤية المملكة 2030م." مجلة العلوم الإقتصادية و الإدارية و القانونية 5, no. 13 (July 30, 2021): 109–90. http://dx.doi.org/10.26389/ajsrp.r021120.
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This study aims to examine the relationship between the roles of audit committee and the satiability of financial inclusion in banking sectors in Saudi Arabia. The researcher used the descriptive analytical approach to achieve the aims of the study, and the questionnaire was the tool of the study which applied to (60) of bank employees and managers in Saudi Arabia. The results revealed that there is positive relationship between the role of audit committee in Saudis’ banks and the satiability of financial inclusion with (0.003) less than (0.005) While, there are negative relationship between the satiability of financial inclusion and audit committee meetings, experiences, and the independency of audit committee members (0.400), (0.841) (0.105). Directing the interest of Saudi banks towards designing the objectives of the audit committees in a manner consistent with the requirements of the banking business and in accordance with the goals of Vision 2030.
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Brennan, Niamh M., and Collette E. Kirwan. "Audit committees: practices, practitioners and praxis of governance." Accounting, Auditing & Accountability Journal 28, no. 4 (May 18, 2015): 466–93. http://dx.doi.org/10.1108/aaaj-01-2015-1925.
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Purpose – The purpose of this paper is to review and critique prior research on audit committees using a practice-theory lens. Research on audit committees has followed the same trajectory as early research on boards of directors, which has been criticised for its singular theoretical perspectives and methodologies that do not capture the complexity of real-world experiences/behaviours. Design/methodology/approach – The authors devise an analytical framework based on practice theory to conduct the review. The authors examine what audit committees should do (i.e. best practice) vs what audit committees actually do (i.e. actual activities in practice – praxis). Attributes of audit committee members, and the relationship dynamics relevant to their role execution (i.e. practitioners), are considered. Findings – Research on boards has found that over-emphasis on agency theory’s monitoring role negatively impacts boards’ effectiveness. The authors invoke other theories in examining what audit committees do in practice. The authors characterise the role of audit committees as oversight not monitoring. The authors question whether, similar to auditing, audit committees are blamist tools or are genuinely orientated towards supporting improvements in organisational management systems. The authors unpack the ritualistic ceremonial behaviours and symbolic endeavours vs substantive engagement by audit committees. The analytical framework also considers the “guardianship circle” around audit committees in the form of the key practitioners and their relationships: audit committee members, auditors and managers. Originality/value – Drawing on the analytical framework, the authors provide directions for further opportunities for research of audit committees.
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Brown, J. Owen, and Velina K. Popova. "The Interplay of Management Incentives and Audit Committee Communication on Auditor Judgment." Behavioral Research in Accounting 28, no. 1 (August 1, 2015): 27–40. http://dx.doi.org/10.2308/bria-51259.
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ABSTRACT This study investigates the interplay of management and the audit committee on auditor judgments and evidence documentation. In a 2 × 2 between-subjects experiment, 58 experienced auditors were tasked with evaluating an inventory obsolescence issue when management's incentives to influence the auditor were either higher or lower. The auditors were also either provided or not provided with additional communicated expectations from the audit committee that opposed management's aggressive reporting preference. Drawing on research on competing preferences and source credibility theory, we predict and find that when management's incentives are higher, additional audit committee communication has a significant and positive impact on auditors' evidence evaluation and related judgments. However, we find no effect of added audit committee influence when management incentives are lower. These findings highlight the importance of examining the interrelationships among the various actors contributing to corporate governance and also inform standard setters about the benefits of increased communication between audit committees and auditors.
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Garner, Steve A., Paul D. Hutchison, and Teresa L. Conover. "The Effect of SEC Disclosure Regulation Regarding Audit Committees' Financial Experts on Foreign Private Issuers Cross-Listed on U.S. Securities Exchanges." Journal of International Accounting Research 15, no. 2 (January 1, 2016): 7–26. http://dx.doi.org/10.2308/jiar-51375.
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ABSTRACT This paper investigates the economic consequences of the Securities and Exchange Commission's (SEC) disclosure regulation by examining market reactions of foreign private issuers (FPI) to events related to the SEC's requirement for a firm to disclose whether its audit committee has at least one financial expert. Using U.S. and home country stock market returns from an FPI, the findings from this study suggest that an FPI traded in U.S. capital markets and subject to SEC regulatory requirements experience negative returns around event dates related to this requirement. Their returns in U.S. markets are also more negatively impacted by the audit committee financial expert disclosure regulation than are the returns in their home countries. Additionally, this study extends research by DeFond, Hann, and Hu (2005), Zhang (2007), and Litvak (2007) by examining the SEC's mandatory disclosures of financial experts on company audit committees.
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Haq, Izhar, Teresa Lang, and Hongkang Xu. "An Examination of the Effects of Change in Committee Chair on Audit Quality." Accounting and Finance Research 6, no. 4 (September 7, 2017): 52. http://dx.doi.org/10.5430/afr.v6n4p52.
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This study uses GMI Ratings directorship data from 2008 to 2013 along with the associated financial data to examine the relationship between audit committee chair change with the absolute discretionary accruals in the financial statements of the reporting companies. Our results suggest that audit committee chair change is positively associated with the absolute discretionary accruals. Specifically, absolute discretionary accruals are significantly higher when there is a change in the audit committee chair. These results are consistent with prior research that deviations from the predicted values of accruals is an indicator of “poor” audit quality. An additional finding of this paper is that a person younger than 60 is more likely to be a new audit committee chair when there is a change and therefore will have less experience and contacts than the outgoing chair. An important implication of these results is that audit committee chair change can have a significant impact on the quality of the financial statements of a company as well as on the audit quality.
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Hoitash, Udi, Rani Hoitash, and Jean C. Bedard. "Corporate Governance and Internal Control over Financial Reporting: A Comparison of Regulatory Regimes." Accounting Review 84, no. 3 (May 1, 2009): 839–67. http://dx.doi.org/10.2308/accr.2009.84.3.839.
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ABSTRACT: This study examines the association between corporate governance and disclosures of material weaknesses (MW) in internal control over financial reporting. We study this association using MW reported under Sarbanes-Oxley Sections 302 and 404, deriving data on audit committee financial expertise from automated parsing of member qualifications from their biographies. We find that a lower likelihood of disclosing Section 404 MW is associated with relatively more audit committee members having accounting and supervisory experience, as well as board strength. Further, the nature of MW varies with the type of experience. However, these associations are not detectable using Section 302 reports. We also find that MW disclosure is associated with designating a financial expert without accounting experience, or designating multiple financial experts. We conclude that board and audit committee characteristics are associated with internal control quality. However, this association is only observable under the more stringent requirements of Section 404.
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Zhou, Zejiang, Haoran Wang, and Xiaoyan Cheng. "Audit committee returnees and auditor choice: evidence from China." Asian Review of Accounting 28, no. 4 (September 17, 2020): 635–63. http://dx.doi.org/10.1108/ara-05-2020-0063.
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PurposeThe purpose of this paper is to examine whether the presence of returnees serving on the audit committee affects auditor choice in emerging markets.Design/methodology/approachUsing a logistic model, this study tests the relationship between the presence of returnees in the audit committee and auditor selection and how this relationship varies with the level of agency costs. The authors also perform several other additional analyses to ensure the robustness of the results, including propensity score matching, Heckman’s two-stage model and change analysis.FindingsUsing A-share listed companies in China from 2008 to 2016, the authors find a positive association between the presence of audit committee returnees and a demand for high-quality auditors and such association is strengthened in firms with a higher level of agency costs. The authors further find that discretionary accruals and the incidence of financial restatements are lower in firms with audit committee returnees.Research limitations/implicationsAlthough this study focuses on audit committee members with foreign study or foreign work experience, it remains to be seen if similar effects could be achieved through foreign ownership or work experience with foreign customers or suppliers.Originality/valueThis study provides evidence on a new channel of international knowledge spillover through which the emigration of talent increases board monitoring by demanding high-quality auditors in an emerging economy.
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Marx, Ben, and Erica Du Toit. "The impact of accounting standards developments and financial reporting complexities on the audit committee." Journal of Economic and Financial Sciences 3, no. 2 (October 31, 2009): 115–32. http://dx.doi.org/10.4102/jef.v3i2.338.
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The developments in accounting standards and the increased complexity of financial reporting present many challenges and difficulties to the preparers of financial statements and the audit committee as overseers of the financial reporting process. Accordingly, the audit committee should consist of independent directors with the right experience and expertise and, given the complexity of today’s financial statements, it is essential that they should also be financially literate, with at least one member being a financial expert. This article discusses the impact of the development and increased technical nature of accounting standards on the constitution and workings of the audit committee. Empirical evidence is also provided that the average audit committee at the largest listed companies in South Africa consists of members who can be considered as financially literate, with at least one member being a financial expert, and that they are compensated for this expertise.
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Bolton, Brian. "Audit committees and insider trading at U.S. banks." Corporate Ownership and Control 8, no. 2, Special issue (2011): 14–31. http://dx.doi.org/10.22495/cocv8i2sip2.
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This paper studies the relationship between insider stock trades by audit committee members and financial concerns at U.S. banks during the 2000s. We initially show that banks with large amounts of discretionary loan loss accruals experience larger stock sales by audit committee members. These stock sales are then associated with banks experiencing subsequent financial problems, measured by firm performance, restatements, and the likelihood of receiving TARP assistance in 2008 and 2009. This suggests that legal insider trading by audit committee members can provide information about a bank’s financial condition and financial statement quality. While this study is focused on commercial banks, the results likely apply to larger samples and to trading by other classes of insiders.
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Dezoort, F. T. "An analysis of experience effects on audit committee members' oversight judgments." Accounting, Organizations and Society 23, no. 1 (January 1998): 1–21. http://dx.doi.org/10.1016/s0361-3682(97)00029-9.
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Zainal Abidin, Nor Hafizah. "Factors influencing the implementation of risk-based auditing." Asian Review of Accounting 25, no. 3 (September 11, 2017): 361–75. http://dx.doi.org/10.1108/ara-10-2016-0118.
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Purpose The purpose of this paper is to examine, from the agency perspective, the influence of internal audit and audit committee attributes, as well as risk management and internal control systems, on the implementation of risk-based auditing among public-listed companies in Malaysia. Design/methodology/approach A questionnaire survey was distributed to the in-house internal audit function in approximately 620 public-listed companies. Consequently, data from 117 heads of the internal audit function was collected and analyzed. Findings The findings indicate that “audit committee review and concern” and “risk management system” are significantly and positively related to the implementation of risk-based auditing. Most importantly, the results indicate the importance of audit committee inputs and concerns in reviewing internal audit activities. Empirically, the findings also suggest that a more formalized risk environment would foster the existence of a strong risk-aware culture and hence provides a strong foundation for internal audit to implement risk-based auditing. However, internal audit experience, size of internal audit function, audit committee qualifications, and internal control system are not found to be significant predictors of the presence of risk-based auditing. Research limitations/implications This study examined only risk-based auditing practices in the in-house internal audit function of public-listed companies; hence, the findings cannot be generalized to all Malaysian-listed companies that outsource or co-source their internal audit activities. Social implications An effective internal monitoring mechanism and better quality of internal audit work will minimize potential risks that prevent the achievement of company objectives, reduce propensity to falsify financial information, and improve financial reporting quality. Originality/value This study contributes evidence concerning the relationship between internal monitoring mechanisms and the implementation of risk-based auditing among in-house internal audit activity.
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Al-Sa’eed, Mo’taz Amin, and Soud M. Al-Mahamid. "The role of effective audit committee in strengthening the financial reporting: Evidence from Jordanian listed companies." Corporate Ownership and Control 9, no. 3 (2012): 59–68. http://dx.doi.org/10.22495/cocv9i3art5.
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This study aims to understand the features of an effective audit committee and its role in strengthening financial reporting. A questionnaire based survey was circulated to public listed companies on the Amman Stock Exchange (Banking, insurance, and financial institutions). The study was aimed at internal audit managers and finance managers. Out of 156 questionnaires, we received 110 back which represents a 71% response rate. The study results show that the research respondents have a good level of education and experience. In addition, there is a relationship between internal controls, international standards on auditing, institute of internal audit; Jordan securities commission requirements, external audit, understanding of audit committee functions, and financial reporting. Furthermore, the internal control, international standard on auditing and institute of internal audit, Jordan securities commission requirements, External audit, understanding of audit committee functions can explain a significant amount of the variability in financial reporting. Finally, the research results also show that age and gender make a difference for our respondents when they evaluate financial reporting. The study like other cross sectional studies is not free of limitations. Managerial implications and new avenues of future research are supplied. Future research also can borrow the research model and apply a longitudinal study to solve the cross sectional study problems.
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Anderson, Urton L., Margaret H. Christ, Karla M. Johnstone, and Larry E. Rittenberg. "A Post-SOX Examination of Factors Associated with the Size of Internal Audit Functions." Accounting Horizons 26, no. 2 (June 1, 2012): 167–91. http://dx.doi.org/10.2308/acch-50115.
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SYNOPSIS This study develops and tests a conceptual model articulating factors associated with internal audit function size in the post-SOX era. These factors include audit committee characteristics, internal audit characteristics and mission, internal audit activities performed by others (including outsourced providers and other divisions within the organization), and organization characteristics. Results from a survey of 173 public and private companies reveal that internal audit function size is positively associated with: (1) better audit committee governance, (2) greater organizational experience of the chief audit executive, (3) missions involving IT auditing, (4) the use of sophisticated audit technologies, (5) the use of a staffing model in which internal audit is used for rotational leadership development, (6) organization size, and (7) the number of foreign subsidiaries that the organization possesses. Further, internal audit function size is inversely associated with: (1) the percentage of internal audit employees that are Certified Internal Auditors, and (2) the extent of assurance and compliance activities outsourced to outsiders. These results contribute to prior literature on internal audit function size by considering a variety of factors that are associated with internal audit function size in the contemporary era. Data Availability: Contact the authors.
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Brown-Liburd, Helen, Arnold M. Wright, and Valentina L. Zamora. "Managers' Strategic Reporting Judgments in Audit Negotiations." AUDITING: A Journal of Practice & Theory 35, no. 1 (October 1, 2015): 47–64. http://dx.doi.org/10.2308/ajpt-51306.
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SUMMARY Prior research has largely characterized audit negotiations as a dyadic relationship between auditors and managers. However, the Sarbanes-Oxley Act (SOX) substantially enhances the audit committee's oversight responsibilities for the financial reporting and auditing processes. Thus, negotiations post-SOX may be viewed as a triadic relationship that now involves the audit committee with the authority to scrutinize audit negotiations. Consistent with auditors considering their relative bargaining power and expectations of counterpart behavior, Brown-Liburd and Wright (2011) find that auditors are most contending when the audit committee is strong and the past relationship is contentious. We extend Brown-Liburd and Wright (2011) by examining the joint effects of these factors on managers' pre-negotiation judgments. We posit that rather than mirror auditor behavior, managers make different judgments because they have a different perspective and set of incentives than do auditors. Prior research suggests that managers are more flexible, more accurately determine their counterpart's goals and limits, and are more likely to use certain negotiation tactics than auditors. Further, managers have incentives to maximize the current outcome while maintaining their firm's reporting reputation. As such, managers will be less aggressive in responding to a contentious past auditor relationship, particularly in the presence of a strong audit committee that may ask difficult questions and potentially intervene against their favor. However, managers will act more aggressively to capitalize on a cooperative past auditor relationship, particularly in the presence of a weak audit committee that is passive or persuadable. To examine these two boundary conditions, we conduct an experiment with 137 experienced CFO/controllers. We find strong evidence supporting our expectations that managers act as if both the audit committee and the auditor jointly play important roles in ensuring high financial reporting quality. JEL Classifications: M41; M42.
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Choi, Sunhwa, Jinwoong Han, Taejin Jung, and Bomi Song. "Audit committee members with CEO experience and the value of cash holdings." Managerial Auditing Journal 35, no. 7 (July 16, 2020): 897–926. http://dx.doi.org/10.1108/maj-04-2019-2269.
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Purpose The purpose of this study is to examine whether the presence of an audit committee (AC) members with Chief Executive Officer (CEO) experience (supervisory experts) affects the market value of cash holdings. Design/methodology/approach To estimate the marginal value of cash holdings, this study uses the model proposed by Faulkender and Wang (2006). The sample is 2,031 firm-year observations in Korea from 2000 through 2015. Findings The authors find that the presence of supervisory experts on ACs has a negative impact on the value of cash holdings. This result suggests that supervisory experts on ACs weaken monitoring of managerial actions. The authors also find that the negative effect of supervisory experts on the value of cash holdings is mitigated when there are other AC members with accounting expertise. Practical implications The findings that AC supervisory expertise impairs the effectiveness of ACs, and thus destroys shareholder value have policy implications because the current regulations in many countries use a broad definition of financial expertise that includes supervisory expertise. Originality/value This is the first study that directly examines the effect of AC supervisory expertise on the value of cash holdings. The study also contributes to the literature on the role of ACs in emerging markets by documenting the limitations of corporate governance systems adopted from the Anglo–Saxon model.
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Et.al, Nooraisah Katmon. "Comprehensive Corporate Governance Mechanism and Disclosure Quality: Evidence from the United Kingdom." Turkish Journal of Computer and Mathematics Education (TURCOMAT) 12, no. 3 (April 10, 2021): 2852–72. http://dx.doi.org/10.17762/turcomat.v12i3.1316.
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Our study empirically examines the relationship between corporate governance and disclosure quality from the context of the United Kingdom. While studies on corporate governance and disclosure quality are extensive, we argue that only limited studies have utilised analyst forecast accuracy as a proxy for disclosure quality. We concentrateon the analyst forecast accuracy since we value the credibility of financial analysts in forecasting the firm’s earnings. Analyst are the expert users of the firm’s information and they rely on their analysis to predict firm’s earnings as well as to make a recommendation. We derived our sample from the analyst perception on the firms with high quality of disclosure that is the Investor Relation (IR) Magazine Award. Specifically we used 127 match-paired sample (i.e., winners and non-winners) of IR Magazine Award during the year 2005-2008. We measure corporate governance using board characteristics, audit committee characteristics, chairman and audit committee multiple directorships, chairman tenure and institutional ownership. Our findings report that multiple directorship by audit committee consistently increases disclosure quality. This suggest that the multiple directorships held by audit committee in other firms potentially improve their knowledge and experience in improving the quality of disclosure.Moreover, the result also shows a negative association between audit committee financial expertiseand board independent on the extent of quality of disclosure. These findings imply that the appointment of audit committee with financial expertise as well as an independent directors are merely a ticking the box activities, thus it appears in the letter form, but not in spirit. Our results are robust across various estimation, alternative measurement as well as endogeneity test that we have conducted.
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Mo, Songtao, Yifan Shi, and Yajing Wang. "The More, The Better? A Case History Of Audit Committee Regulations." Journal of Business Case Studies (JBCS) 9, no. 2 (February 21, 2013): 105–10. http://dx.doi.org/10.19030/jbcs.v9i2.7695.
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An understanding of changing auditing regulatory environment is vital in preparing students for the challenges in the accounting profession. The revised requirements for audit committees are one of the significant changes after the Sarbanes-Oxley Act of 2002. Presenting a case history of regulatory changes for audit committees, this study requires students to critically analyze information and to conduct research on auditing topics. Meanwhile, integrating further discussion on corporate governance into auditing class can enrich students learning experience by stimulating critical thinking.
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Bierstaker, James L., Jeffrey R. Cohen, F. Todd DeZoort, and Dana R. Hermanson. "Audit Committee Compensation, Fairness, and the Resolution of Accounting Disagreements." AUDITING: A Journal of Practice & Theory 31, no. 2 (February 1, 2012): 131–50. http://dx.doi.org/10.2308/ajpt-10238.
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SUMMARY An emerging body of research examines the relation of incentive-based audit committee compensation with accounting outcomes (e.g., Archambeault et al. 2008; Magilke et al. 2009). We extend this literature by examining the effects of audit committee compensation and perceived fairness to shareholders on actual public company audit committee members' judgments in accounting disagreements. Fifty-six highly experienced public company audit committee members participated in an experiment involving an accounting disagreement between management and the external auditor, with three types of audit committee compensation (i.e., cash only, cash and short-term stock options, or cash and long-term stock options) manipulated between subjects. We further measured the participants' perceptions of the fairness to shareholders if the auditor's adjustment is not recorded. We find evidence that audit committee members are more likely to support the auditor in an accounting disagreement when audit committee compensation includes long-term stock options and when members perceive that the failure to record the auditor's adjustment is less fair to shareholders. Moreover, we find that the relation between long-term incentive compensation and support for the auditor is fully mediated by a sense of fairness to shareholders. We offer implications and suggestions for future research.