Abstract
The corporate governance literature indicates efforts to investigate the role of the audit committee (AC) in improving the financial reporting quality (FRQ) after the emergence of financial scandals in many countries in the world, inclusive Jordan. To date, empirical findings are inconclusive enough to address all audit committee characteristics regarding its competency and responsibilities by employing a questionnaire to collect data about this relationship. Thus, this study measures the correlation between AC (performance and composition) and FRQ of manufacturing corporations registered on the Amman Stock Exchange (ASE). To test this impact empirically, the target population was financial managers, audit committee members, and internal audit managers who are working in manufacturing corporations listed on the (ASE). According to the coefficient (β), the independent variables (Audit Committee Performance and Audit Committee Composition influence the dependent variable FRQ. This research recommends that firms enhance the audit committee work performance and composition to ensure audit committee members effectively enhance the FRQ audit committee is a vital mechanism of the firm's corporate governance system.
Highlights
Financial reports must be treated with a certain amount of caution by companies as some of the economic content provided may be ambiguous and materially false (Cohen et al, 2017)
The questionnaire was developed employing using the five point-Likert scale to describe the impact of audit committee performance and composition on (FRQ) in manufacturing companies listed on the (ASE)
In an attempt to develop the (FRQ), this study is based on the responses of (AC) members and financial managers as regards assessing the effectiveness of audit committees and the part they play in increasing the value and benefits of financial reporting
Summary
Financial reports must be treated with a certain amount of caution by companies as some of the economic content provided may be ambiguous and materially false (Cohen et al, 2017). When information included in a financial report is proven to be erroneous, this may create a challenging situation for a company besides its regulator and its auditors, resulting in insolvency in addition to legal action (Bajra and Čadež, 2018). Concerning manufacturing firms registered on the (ASE) in Jordan, the financial report is a vital source of invaluable information, seeing as stakeholders can employ it to make sensible decisions regarding future investments and fund commitments. It is worth mentioning that other sources of financial information are freely available regarding manufacturing companies recorded on the (ASE). Financial reports are acknowledged as comprising data that is more credible and essential
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