Audit committee characteristics and accounting conservatism: An empirical investigation

Abstract

The purpose of this paper is to examine the association between Audit committee characteristics (expertise, independence, size, and activity) and accounting conservatism in the Egyptian setting. To achieve this purpose, data is collected from the annual reports and board of director's reports of the companies included in the sample which is composed of 11 companies that belong to five main sectors: real estate, basic resources, IT, media and communication, non-bank financial services, and textile and durables sector. These companies are listed in the Egyptian Stock Exchange (EGX) during the period from 2015 to 2019. Two regression models were developed to test the research hypotheses. Results show that audit committee expertise is positively associated with the degree of accounting conservatism in the Egyptian listed firms' financial statements, while this association is not proven for audit committee independence, size, or activity. The findings have implications for Egyptian standard-setters and regulators, Egyptian firms and investors in Egypt and other developing countries.