Audit Committee Variables Research Articles

Factors Influencing the Stock Price of Banking Companies in the Indonesia Stock Exchange

The banking sector is the industry most regulated by the government has given the importance of this sector in the country's economy as a bridge for financing the real sector. Stocks in the banking industry are one of the stocks that are highly sought after by investors. Banks that have good health will attract many investors. The purpose of this study is to prove the influence of the bank's health level – risk profile and good corporate governance – on stock price in the banking sector companies on the IDX. The data used in this study are secondary data in the form of financial statements of banking companies. The independent variables in this study are risk profile and GCG, which consist of Non Performing Loans (NPL), Interest Rate Risk (IRR), Loan to Deposit Ratio (LDR), Managerial Ownership, Institutional Ownership, Independent Commissioner, Size of Board of Directors, Committee Audit and dependent variable Share Price. The sampling method in this study was purposive sampling with a sample of 7 banking companies registered on the Indonesia Stock Exchange. Stock price are the closing price on Yahoo Finance. The data analysis technique used is parametric statistical test – multiple linear regression analysis and classical assumption test, including normality test, autocorrelation test, multicollinearity test, and heteroscedasticity test. Test of hypothesis used the R Square test, partial t-test, and F test. The results of the study prove that the Non-Performing Loan (NPL), Independent Commissioner, and Audit Committee variables have no influence on the Stock Price. However, the Interest Rate Risk (IRR), Loan to Deposit Ratio (LDR), Managerial Ownership, Institutional Ownership, and the Size of the Board of Directors have an effect on Stock price.
 Keywords: Non-Performing Loan (NPL), Interest Rate Risk (IRR), Loan to Deposit Ratio (LDR), Managerial Ownership, Institutional Ownership, Independent Commissioner, The size of the Board of Directors, the Audit Committee, and stock price.

Corporate Governance Mechanism, Company Size Financial Performance and Sustainability Reporting

The importance of sustainability reporting for companies to be able to know the role of the company in disclosing social responsibility and the implementation of corporate sustainability as a manifestation of corporate governance mechanisms, company size and financial performance. This study uses a stratified random sampling method for companies that have revealed sustainability reports and those that do not disclose sustainability reports. The research method uses logistic regression, with a sample of 13 non-financial companies listed on the Indonesia Stock Exchange. Based on the results obtained, it can be seen that the mechanism of corporate governance consisting of independent commissioner variables has a negative influence on sustainability reporting, institutional ownership variables have a positive influence on sustainability reporting, managerial ownership variables have a negative influence on sustainability reporting, audit committee variables have a negative effect on sustainability reporting, the variable size of the company gives a negative influence on sustainability reporting, and financial performance variables which are leverage variables have a negative influence on sustainability reporting. Â

Audit Committee Diversity toward Voluntary Disclosure Reporting with Existence of Regulatory Regime as Moderation Variable: a Critical Review

The audit committee is a fundamental and prerequisite tool for fulfilling board’s monitoring role of ensuring transparency, financial and managerial efficiency. Therefore, it has been applied to address perceived governance failure. This paper aims to critically review the previous literature on the relationship between audit committee diversity as a major corporate governance mechanism and corporate voluntary disclosure reporting (CVDR) with a change in the regulatory regime as moderation variable. This review specifically evaluates theoretical and empirical literature related to audit committee diversity such as independence, financial expertise, accounting expertise; and CVDR in order to highlight some important areas of gaps for future research in this field. It also, emphases the need for a more qualitative method for better understanding of the relationship. This paper proposes that examining the moderating influence of the change of the regulatory regime with regard to CVDR would provide more insight into the link between audit committee diversity and CVDR. The policy implication of the study is also discussed. Lastly, the paper stresses the importance of future studies linking audit committee diversity and CVDR, which are quite scanty the existing literature.

Pengaruh Penerapan Corporate Governance Terhadap Kondisi Kesulitan Keuangan

This study examined the effect ofthe implementation of corporate governance on the condition of the financial distress of manufacturing companies listed on the Indonesia Stock Exchange (IDX). The implementation of corporate governance proxied with the proportion of managerial ownership, proportion of institutional ownership, number of the boards of directors, proportion of independent commissioners, and existence of the audit committee. Samples used in this study was manufacturing companies listed on the Indonesia Stock Exchange (IDX) with 2012 up to 2016 as an observation period. The total study samples was 48 firms with 96 firm year are determined by the method of purposive sampling. This study used Logistic Regression to examine the effect of the implementation of corporate governance of the condition of the company's financial distress. The results of this study indicated that The number of the boards of directors and the proportion of independent commissioners variables were not proven to have significant influence on the condition of the company's financial distress. The proportion of managerial ownership, the proportion of institutional ownership, and the existence of the audit committee variables proved to have a significant influence on the condition of the company's financial distress with a positive influence.
 Keywords: board of directors, independent commissioners, managerial ownership, institutional ownership, audit committee, financial distress, logistic regression

Audit committee characteristics, board ethnic diversity and earnings management: evidence from Kenya and Tanzania

This paper investigates the relationship between audit committee characteristics, board ethnic diversity and earnings management in Eastern Africa. We attempt to determine whether compliance with audit committee guidelines has constrained earnings management in companies operating in an environment where control of corruption is considered weak. We include firm performance to the modified Jones model to measure discretionary accruals. The data are collected from annual reports over the period 2005–2014 resulting to a total of 480 firm-year observations. Panel data models are employed in the analyses. The results show that absolute discretionary accruals average about 11.5%, while the independence of the audit committee, the presence of a financial expert on the audit committee and board ethnic diversity were negatively and significantly related to earnings management. We also find that audit committee structures are not country specific.

Effect of Audit Committee Diversity on Quality of Financial Reporting in Non-Commercial State Corporations in Kenya

The purpose of this study was to establish the effect of audit committee diversity on quality of financial reporting in non-commercial state corporations in Kenya. All the non-commercial state corporations that existed in 2005 were studied. The study was founded on stewardship theory, policeman theory, lending credibility theory and stakeholder theory. The study adopted descriptive research design and the target population of the study was the seventy two noncommercial state corporations that existed subsequent to the introduction of Treasury guidelines in 2005 on formation and operationalization of audit committees in the public sector. The study used a census survey on all 72 state corporations. The study employed stratified purposive sampling to select the respondents from the target population. The study used primary and secondary data. Primary data was obtained from administration of the questionnaires and the secondary data obtained from the Kenya National Audit Office annual reports, Audited Financial statements of state corporations and Finance Bills of the respective financial years. Descriptive statistics used were frequencies, mean and standard deviation, while inferential statistics used are correlation and regression analysis. Regression analysis was employed to measure relationships between dependent and independent variables. The findings from both correlation and regression analysis revealed that audit committee diversity had statistically significant relationship with the quality of financial reporting. This study recommended that when constituting audit committees in state corporations, consideration should be put on diversity. Diversity of audit committees should be evaluated based on gender, age, geographical orientation and tenure. Audit committees should consist of diversified members. This because demographic diversity of audit committee enhances the quality of firm‘s financial reporting.

Audit Committee Diversity and Financial Restatements

Financial restatements reflect a governance and ethical failure in affected firms and lead to the particular scrutiny of the role played by the firm’s leaders and monitors. In this study, we examin...

Corporate Governance and Audit Committee in Nigeria

The purpose of this research is to evaluate whether corporate governance principles affect audit committee functions by ensuring that financial statements reflect the true financial position of companies. Data were analysed using correlation analysis. Spearman's correlation was calculated between the average scores on corporate governance variables and audit committee variables. The computations were done using SPSS statistical software. The study shows that corporate governance principles affect audit committee functions by ensuring that financial statements reflect the true financial position of companies. It is suggested that companies should be good corporate citizens\and that members of the audit committee should possess requisite accounting knowledge to, be able to effectively scrutinize the financial statements or query accounting practices of preparers of those financial statements.

The Role of the Audit Committee in Moderating the Negative Effect of Non-Audit Services on Earnings Quality

This paper examines the effect of audit committee effectiveness on the relationship between non-audit services (NAS) and the quality of earnings. We hypothesize that audit committee effectiveness will mitigate the adverse effects of the provision of NAS on the quality of reported earnings. This study uses a sample of 455 firms listed on Bursa Malaysia in the year 2010. Audit committee effectiveness is measured using the Principal Component Method based on four audit committee variables: the size of the audit committee, the proportion of outsiders on the committee, the total number of audit committee meetings during the year, and the attendance rate for audit committee meetings. Examination on the dataset reveals that NAS adversely affects the quality of accounting information, in terms of the lower earnings response coefficient (ERC). The statistical tests also show that this negative relationship becomes weaker when the firms have a more effective audit committee. The results are robust even after controlling for firm growth, risk, earnings variability, earnings losses, and the likelihood of debt covenant violation. In short, this study provides evidence that investors did perceive NAS as impairing auditor independence, and that the inverse effect would be reduced by setting up a more effective audit committee.

The empirical relationship between ownership characteristics and audit fees

The present study examines the empirical relationship between ownership characteristics and audit fees. The basic premise is that the level of ownership sophistication and the extent to which ownership is large and substantial impact the effectiveness of stockholder monitoring on corporate affairs including the financial reporting process. Furthermore, high managerial ownership firms may experience a decline in agency problems in financial reporting due to a decrease in managerial propensity to misreport financial results. By employing a cross-sectional least squares regression analysis for a sample of 358 New York Stock Exchange-listed firms audited by the Big Five auditors, we find evidence of a significantly positive relationship between diffused institutional stock ownership (i.e., having less than 5% individual shareholding) and audit fees, and a significantly negative relationship between institutional blockholder ownership (i.e., having 5% or more individual shareholding) and audit fees. Finally, we document that managerial stock ownership is negatively associated with audit fees. We do not, however, find evidence of any relationship between noninstitutional blockholder ownership (with at least 5% individual stock ownership) and audit fees. The study's main results hold in various specification tests including when the effects of board-related and audit committee variables are factored in the analysis. Based on the observed relationship between the ownership variables and audit fees, we suggest that the ownership characteristics of a firm as a part of its governance mechanism constitute an important determinant of audit fees.