Audit Committee Characteristics Research Articles

How Audit Fees Impact Earnings Management in Service Companies on the Amman Stock Exchange through Audit Committee Characteristics

The primary objective of this research was to investigate the potential moderating role of audit fees in the relationship between audit committee characteristics and earnings management. Specifically, this study aimed to establish connections between audit committee features, such as committee size, member independence, and financial expertise, and the practice of earnings management. To address these research questions, a convenient sample of 46 service providers listed on the Amman Stock Exchange between 2016 and the subsequent year was employed. Descriptive statistical methods were applied to characterize the variables under investigation, while a multiple regression model was utilized to assess the study’s hypotheses. The findings of the study revealed that there was no significant correlation between the size of the audit committee and earnings management. However, a negative correlation was observed between the audit committee’s independence and the financial expertise of its members. Importantly, when audit fees were introduced as a moderating variable, the relationships between committee member independence and earnings management, as well as between committee member financial expertise and earnings management, were found to be weakened. These results have potential implications for policymakers and regulators in Jordan. They may offer valuable insights into corporate governance reforms that could assist Jordanian businesses in enhancing their earnings management practices.

The financial performance of Lebanese banks up to the financial crisis: do audit committee characteristics and ownership concentration matter?

PurposeThe focus on corporate governance has increased after the financial collapses of several banks worldwide, such as Silicon Valley Bank and First Republic Bank in the USA, and the failure of the Lebanese banking sector. This study examines the impact of audit committee (AC) characteristics on financial performance and investigates the moderating effect of ownership concentration (OC) on the associations between AC characteristics and profitability.Design/methodology/approachThe current research is carried out based on 211 Lebanese banks’ annual reports, focusing on the period from 2012 to 2021. The ordinal least squares (OLS) and the hierarchical multiple regression analysis were adopted to test the study’s hypotheses.FindingsThe outcomes reveal that AC size, AC frequency of meetings, and banks’ size (control variable) positively affect financial performance; however, OC does not moderate the associations between the AC characteristics and banks’ profitability.Originality/valueAccording to the researcher’s knowledge, no prior study has investigated the moderating effect of OC on these associations. Moreover, the current study contributes to the literature that documented mixed and inconsistent results regarding the direct associations between AC characteristics and financial performance.

Audit committee characteristics and firm financial performance of quoted industrial goods firms in Nigeria

Purpose: This study examines the effects of audit committee characteristics on the financial performance of listed industrial goods firms in Nigeria. Research methodology: This study used an ex-post factor research design and utilized secondary data collected from the annual reports and accounts of thirteen (13) sampled industrial goods firms for a period of 10 years (2013-2022). The sample of firms was obtained using a purposive sampling technique. Data were analyzed using descriptive statistics, correlation, and regression analysis (GLS Random Effect) with the aid of Stata 13. Results: The findings reveal that an insignificant positive effect exists between audit committee size and financial performance (ROA and ROE), while audit committee independence has a significant negative effect on return on assets (ROA) and a negative insignificant effect on return on equity (ROE), and audit committee meetings have a positive significant effect on asset (ROA) and a positive insignificant effect on return on equity (ROE). Limitations: The research is limited to only those companies in the industrial goods sector listed on the Nigerian Stock Exchange from 2013 to 2022 and only focuses on the effect of audit committee characteristics on firm financial performance. There was also incomplete data, which did not allow for a complete and thorough analysis of the entire sector. Contribution: This study contributes to the existing body of literature on the effect of audit committees on the financial performance of Nigeria’s listed industrial goods sector. It provides insights that can assist the board in formulating appropriate strategies to improve their performance.

Corporate Governance as Antecedent of Financial Distress: Case Study of Textile Industry of Pakistan

Purpose: The present research studies the effect of corporate governance practices on the level of financial distress of the Textile companies listed at PSX. 
 Design/Methodology: Data from 2019 to 2022 from a sample of 43 companies operating in the weaving, spinning and composite textile industry was assessed in the study. Regression analysis was used to predict the impact of board independence, board size, audit committee independence and duality in the role of CEO and chairman on the financial distress.
 Findings: The findings reveal that board independence, board size and the duality in the role of Chairman and CEO impacts the financial distress level of the companies and that in companies wherein governance structure is strong, the likelihood of financial distress is lower. However, the effect of Audit committee independence is found to be insignificant in this study.
 Originality: This study provides support to the companies in understanding the importance of governance structure and its significance in reducing financial distress level. The findings of the study will be of value to the companies operating in textile sector by enabling them to strengthen their governance structure to address the financial distress situation. Further, this study will help the regulators in drafting the governance requirements for the companies and also educating them about the importance of the latter. In future, other studies using different proxies of corporate governance like gender diversity in the board, number of board meetings and characteristics of audit committee may be conducted..

Audit committee attributes and bank performance in Africa

PurposeThis study aims to evaluate how audit committee (AC) characteristics affect the performance of banks in Africa.Design/methodology/approachThe authors manually generated unbalanced panel data from 78 commercial banks operating in twelve (12) countries whose annual reports were published on the website of African Financials between 2010 and 2020.FindingsThe results indicate that AC size has an insignificant positive association with bank performance (return on equity and Tobin’s Q). AC independence has a significant positive association with bank performance. However, AC gender diversity has a significant negative association with bank performance. Besides, AC financial expertise has a significant positive and negative association with return on equity and Tobin’s Q, respectively.Research limitations/implicationsThe study considered only 78 banks that operate in twelve (12) African countries. Besides, the authors consider only four (4) AC attributes.Practical implicationsThe findings suggest the need to maintain a smaller AC, appoint more independent members to AC, reduce the number of women appointed to AC and ensure most AC members have financial expertise. These measures could improve bank performance in Africa.Originality/valueUnlike previous African studies that are mostly restricted to a country level, the study examined how AC attributes influence the performance of banks that operate in Africa.

Audit committee characteristics and earning management of insurance companies in Ethiopia

Audit committee characteristics and earning management of insurance companies in Ethiopia

Audit committee characteristics and tax planning: evidence from the ago-industry in listed companies in Thailand

Audit committee characteristics and tax planning: evidence from the ago-industry in listed companies in Thailand

The Impact of Board Size and Audit Committee Characteristics on Financial Performance in Foreign Exchange Banks: Evidence from Indonesia

The Impact of Board Size and Audit Committee Characteristics on Financial Performance in Foreign Exchange Banks: Evidence from Indonesia

Audit Committee Characteristics and Firm Performance with the Moderating Role of Political Connections

Audit Committee Characteristics and Firm Performance with the Moderating Role of Political Connections

Internationalization of enterprises and quality of financial reports in China: Moderating roles of audit committee characteristics

In the process of seeking sustainable development, enterprises have chosen international business strategy. The purpose of this study is to examine the relationship between the degree of internationalization of Chinese listed firms and financial reporting quality, as well as whether audit committees can moderate the impact of enterprise internationalization on financial reporting quality. The empirical analysis results of Chinese listed manufacturing firms from 2014 to 2018 show that: the degree of corporate internationalization has a significant U-shaped relationship with earnings management. This new finding solves the problem that scholars have inconsistent views on the internationalization of enterprises and the quality of financial reporting. The study also found that audit committees with experience working in accounting firms can inhibit firm earnings management behavior in the early stage of internationalization; audit committees with experience working overseas can inhibit firm earnings management behavior in the later stage of internationalization; the higher the remuneration of audit committee experts, the more it can inhibit firm earnings management behavior in the early stage of internationalization. In the later stage of internationalization, the higher the remuneration of audit committee experts, it helps the earnings management behavior of firms. This provides new evidence on the functioning of the audit committee’s role; however, the independence of the audit committee and the proportion of financial experts do not have a significant effect on the inhibition of earnings management.

The Impact of Audit Quality, Attributes of The Audit Committee, and Institutional Ownership on the Promptness of Financial Reporting

This research investigates and tries to find empirical evidence regarding the impact of audit quality, audit committee characteristics, and institutional ownership on the timeliness of submitting financial reports. The method’s approach applied in this research is associative quantitative research using secondary data in the form of annual financial reports taken from the official website of the Indonesia Stock Exchange. All Food and Beverage sector companies listed on the Indonesian Stock Exchange are the population for this research. The sample was selected by applying a purposive sampling technique using predetermined criteria. The total number of samples used was 60 data over a research period of 5 years. The analytical method applied in this research is multiple linear analysis using the Eviews 9 program. The findings of this research show that there is an impact of auditor quality on the timeliness of submitting financial reports, while the size of the audit committee, frequency of audit committee meetings, and institutional ownership do not have a significant influence on the timeliness of submitting financial reports.

Audit committee characteristics and firm performance: a cross-country meta-analysis

PurposeThe purpose of this study is to investigate the impact of audit committee characteristics on firm performance. In particular, the authors employ the random-effects variant of the Hunter–Schmidt meta-analyze procedure to analyze the effects of key audit committee attributes, namely audit committee independence, audit committee expertise, audit committee size, audit committee meeting along with big four impact on firm performance. The authors hope to gain a better understanding of the function of audit committees in enhancing firm performance and to uncover potential discrepancies in prior findings due to varying economic levels or performance metrics.Design/methodology/approachThis study uses the Hunter–Schmidt method to conduct a meta-analysis of 39 previous studies published between 2012 and 2022 to investigate the relationship between audit committee characteristics and firm performance.FindingsThe results indicate that audit committee independence, expertise, size and affiliation with the big four have a significant and positive effect on firm performance, while audit committee meetings have a non-significant effect. Furthermore, findings suggest that companies should carefully consider the contextual factors that may impact the effectiveness of their corporate governance structures, such as economic level, when designing and implementing governance mechanisms.Originality/valueThis study is significant as it is the first to combine and analyze previous research on this topic and highlights the importance of certain audit committee characteristics in enhancing financial reporting quality and corporate governance.

Connection Between the Audit Characteristics and Corporate ESG Performance in Indonesia

This research delves into the essential connection between audit committee characteristics and the ESG performance of corporations in Indonesia. Existing studies emphasize the pivotal role of audit committees in shaping ESG outcomes, focusing on factors like independence, expertise, and committee size. However, there is a limited comprehensive examination of these dynamics within the context of Indonesian businesses. The study seeks to empirically examine the correlation between audit committee characteristics and corporate ESG performance among listed companies on the Indonesia Stock Exchange, explicitly exploring four key attributes. The results highlight a noteworthy influence of Audit Expertise and Internal Auditor characteristics on corporate ESG performance. These findings provide valuable insights for companies, auditors, and policymakers, offering empirical evidence to enhance comprehension and practices related to corporate governance and ESG performance. Furthermore, the study's implications extend beyond the Indonesian context, contributing to a broader understanding of the global discourse on sustainable business practices.

The effect of audit team and audit committee performance on the quality of audit

The study investigates the impact of audit committee performance (ACP) and audit team (AT) characteristics on audit quality. The research problem emerges when we question whether the characteristics of audit committees (ACs) impact audit quality. Additionally, an inquiry arises regarding the influence of the characteristics of the audit (CAT) team within the audit offices of Iraqi audit firms (AFs) on the audit quality. ACP characteristics include the number of members, independent members, financial and accounting experience of committee members, meeting frequency, and the presentation of financial annual reports (FARs) and auditor’s reports. CAT encompasses the team’s number, experience and industrial specialization (EIS), auditor’s judgment, and time required for audit tasks. We relied on a study (Husain, 2020; Alderman & Jollineau, 2020; Al-taee & Flayyih, 2022) in the study model design. The sample comprises 82 firms from the Iraq Stock Exchange with disclosed financial reports (2021–2022). The results reveal that the presentation of FARs and the industrial specialization and experience of CAT significantly influence audit quality, while other variables show no significant impact.

The moderating role of key audit matters in the relationship between audit committee characteristics and audit report lag

The audit committee roles are essential to corporate governance because they are accountable in many aspects of financial governance. In order to understand the relationship between audit committee meeting (ACM) frequency, audit committee size (ACZ), and audit report lag (ARL) in Jordan, this study looked at the moderating effect of key audit matters (KAMs). A correlational research strategy was employed in the study. The data gathered from the 144 Jordanian enterprises for the period of 2016 to 2020 were disclosed in their published annual financial reports. The results show that, in terms of audit committee characteristics, there is no association between ARL and ACZ. Moreover, there is a non-significant relationship found between ACM and ARL. Furthermore, the outcome shows that KAMs and ARL are not significantly associated. On the connection between ACZ and ARL, however, the interaction impact of KAMs shows no moderating effect. Furthermore, the results show that the relationship between ACM and ARL is unaffected by the use of KAMs as a moderating variable. Given their influence on investor decisions, the study hereby advises businesses to pay close attention to the date of the external auditor’s report.

The nexus between free cash flow, audit committee characteristics, and earnings management practices

The nexus between free cash flow, audit committee characteristics, and earnings management practices

Audit committee characteristics and financial reporting quality: Evidence from the emerging market

Audit committee characteristics and financial reporting quality: Evidence from the emerging market

The nexus between free cash flow, audit committee characteristics, and earnings management practices

The nexus between free cash flow, audit committee characteristics, and earnings management practices

The analysis of the characteristics of external auditor and audit committees: Tax avoidance

Companies have an obligation to pay taxes to the state. Tax revenues require supervision to prevent tax avoidance activities. Regulatory gaps governing the tax system and aggressive tax strategies are used by the company to minimize payment of tax costs. The monitoring mechanism to minimize tax avoidance is carried out by auditors. The research objective is to test and provide empirical evidence regarding the characteristic factors of external auditors and the existence of an audit committee that influences tax avoidance. This study uses a quantitative approach. Research data was taken using a purposive sampling technique. The research object is an energy company listed on the Indonesia Stock Exchange, IDX (Bursa Efek Indonesia, BEI) with the observation year 2012–2021. The analysis technique uses classical assumption tests, multiple linear regression, and hypotheses testing. The research results show that the length of the audit engagement has a negative influence on tax avoidance. Audit opinions, audit fees, and audit committees have no effect on tax avoidance. The conclusion of this research emphasizes the importance of supervision to control and minimize the negative impact of tax avoidance practices.

Corporate disclosure and earnings management: The moderating role of corporate governance mechanisms

Notwithstanding the enormous amount of regulation and standards governing the financial reporting process, corporate failures and prior research have strongly indicated that earnings management (EM) is becoming a regular business practice in most firms today. Although this practice is more common in developed economies, there is limited research on corporate governance (CG) failures that have occurred in East Africa’s emerging economies. In this study, therefore, we examine whether corporate governance mechanisms (CGM) moderate the association between corporate disclosure (CD) and EM using evidence from listed firms at the Uganda Securities Exchange (USE). We employ disclosure and corporate governance indices to measure the extent of CD and corporate governance. Additionally, we use the magnitude of discretionary accruals (DACC) obtained from the modified Jones model as a proxy for EM. We find that audit committee (AC) characteristics have a negative and significant moderating effect on the association between CD and EM. Our study contributes to the growing strand of literature on the moderating or complimentary effect of CGM in constraining EM in the context of an emerging economy.