Effect Of Audit Committee Characteristics Research Articles

The Effect of Audit Committee Characteristics on Audit Quality: The Moderating Role of Internal Audit Function

The purposes of study are to examine the effect of audit committee characteristics namely gender, frequency of meetings, independence member in audit committee and audit committee size on audit quality and the moderating role of internal audit function in the relationship between audit committee characteristics and audit quality. The objective is to contribute to the new evidence on the role of audit committee characteristics plays towards the audit quality with internal audit function as moderator. This research applied a quantitative approach and secondary data as the main source of information for analysis. Stratified random sampling techniques are being used in this study. Further, the structural equation modelling (SEM) approach via SmartPLS was utilized to achieve the research purpose by evaluating the data collected from 250 public listed companies in Malaysia. The results reveal that only three of the audit committee characteristics, namely presence of female members in the audit committee, frequency of meetings and independence of directors, are positively influencing the audit quality for listed companies in Malaysia. Surprisingly, this study also found that internal audit function did not play the moderating effect in the relationship between audit committee characteristics and audit quality. The findings will facilitate researchers and scholars to enhance the understanding of audit committee characteristics particularly the gender, frequency of AC meetings and independence members in the audit committee played in improving overall audit quality. The companies’ stakeholders like professional accountancy body and governments may use the outcomes from this research study to improve existing rules and government regulations and code of conducts of its members to improve the quality of their works. This study contributes to the relatively new discussion on the effect of audit committee characteristics on audit quality by adding internal audit function as a moderator in Malaysia. The outcome from this study may assist the companies’ stakeholders like professional accountancy body and governments in determining improved methods to enhance audit committee characteristics in improving audit quality.

The Role of the Audit Committee On the Performance of Indonesian State-Owned Enterprises (BUMN) Registered on the Indonesia Stock Exchange

It has never been thoroughly investigated whether the existence of the Audit Committee on the SOE board of commissioners is truly as beneficial as expected. Based on research that has been done, there is still a diversity of opinions regarding the effect of audit committee characteristics on company performance. The purpose of this study is to study whether audit committee size and number of audit committee meetings affect company performance. The grand theory of this research is agency theory or agency theory and corporate governance. This research uses quantitative research methods. Data processing is performed using eviews 9. The unit of analysis is the company. The sample is 20 (twenty) SOEs registered on the Indonesia Stock Exchange from 2013 to 2018. The sample must also be BUMN that has a complete Audit Committee report. The results showed that the number of chairpersons and members of the audit committee had a positive effect on company performance, the number of audit committee meetings had no significant effect on company performance, and the size of the company had a significant negative effect on company performance.

The Impact of Audit Committe Characteristics on Audit Quality

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.

Audit Committee Characteristics and Financial Performance: Indonesian Evidence

This research investigates the effect of audit committee characteristics, which includes independence (ACIN), size (ACSIZE), competence (ACCO), and frequency of meetings (ACMT) on the financial performance (PERF) of manufacturing firms listed on the Indonesian Stock Exchange for the year of 2016 and 2017. PERF is measured and proxy with the return on assets (ROA); ACIN is measured by the percentage of members from outside the company; ACCO is measured using percentage of audit committee members who have accounting and finance educational background; and ACMT is measured using the number of audit committee meetings in 2016 and 2017. The study finds that all of the characteristics of audit committee positively affect the company's performance. The research also uses three control variables, which are the quality of auditors (BIG4), financial leverage (LEV) and company size (SIZE). BIG4 and LEV positively affect the company's financial performance, while the financial performance of the company is negatively affected by SIZE.

The effect of audit committee characteristics on earnings management: the case of Indonesia

We investigate the effectiveness of audit committee in mitigating earnings management in the context of Indonesia. Audit committee is expected to reduce earnings management. This study examines the effect of several audit committee characteristics: independence of audit committee members, number of audit committee members, number of meetings, expertise in finance and gender on earnings management. We study 393 Indonesian listed firms during the 2006-2010 period. Results show that female member(s) of audit committee mitigate earnings management. However, financial expertise and number of meetings have positive effect on earnings management. This result shows that both variables might not be effective to constraint earnings management. On the other hand, number of audit committee members and independence of audit committee member do not have any significant influence on earnings management. Further, this study shows that audit firms and leverage have negative effect on earnings management. However, institutional investors tend to push earnings management higher and growth has no significant effect on earnings management.

The effect of audit committee characteristics on earnings management: the case of Indonesia

We investigate the effectiveness of audit committee in mitigating earnings management in the context of Indonesia. Audit committee is expected to reduce earnings management. This study examines the effect of several audit committee characteristics: independence of audit committee members, number of audit committee members, number of meetings, expertise in finance and gender on earnings management. We study 393 Indonesian listed firms during the 2006-2010 period. Results show that female member(s) of audit committee mitigate earnings management. However, financial expertise and number of meetings have positive effect on earnings management. This result shows that both variables might not be effective to constraint earnings management. On the other hand, number of audit committee members and independence of audit committee member do not have any significant influence on earnings management. Further, this study shows that audit firms and leverage have negative effect on earnings management. However, institutional investors tend to push earnings management higher and growth has no significant effect on earnings management.

The Effect of Audit Committee Characteristics and Firm Financial Performance: An Empirical Study on Listed Companies in Iraq Stock Exchange

The Effect of Audit Committee Characteristics and Firm Financial Performance: An Empirical Study on Listed Companies in Iraq Stock Exchange

Effect of Audit Committee Characteristics on the Timeliness of Financial Reporting in Nigeria

This study investigated the effect of audit committee effectiveness on the timeliness of financial reporting in Nigeria using listed companies in the food and beverages industrial sector of Nigeria economy. The period under review spans from 2011-2015. Data collected were analyzed using both descriptive and inferential methods of statistical analysis. Descriptive statistical analyses employed include mean and standard deviation while inferential statistical analyses employed in the study include correlation and regression analysis. The study revealed that there is no significant relationship between audit committee size and timeliness of financial reporting among listed food and beverages companies in Nigeria. The study further revealed that the relationship between frequency of meetings and timeliness of financial reporting among listed food and beverages companies in Nigerian is not significant. The study concluded that a proportional increase in frequency of meetings will increase timeliness of financial reporting and vice versa and this is not statistically significant meaning that frequency of meetings have no significant relationship with timeliness of financial reporting. The study recommended that audit committee size should not be increased beyond the regulatory specification of six.

The Impact of Audit Committee Characteristics on the Creative Accounting Practices Reduction in Jordanian Commercial Banks

This study aimed at determining the impact of the characteristics of the Audit Committee (The effect of Activity of the Audit Committee, the size of the Audit Committee, and Independence of the Audit Committee) in reducing creative accounting practicesin Jordanian commercial banks.The study population is composed of all Jordanian banks listed on the Amman Stock Exchange (16), during the period from 2011 to 2017. The study sample is represented by all Jordanian commercial banks. The current study is based on panel data since the data combine one-time and cross-section data for a period of time. The data was composed of a set of indicators for 13 Jordanian commercial banks for the period from 2011 to 2017, and data have been collected from the banks' annual reports. The adoption of the study on the analysis of time-series data comes from the increase in degrees of freedom.
 
 The results of the hypothesis test indicate that there is a significant effect of Audit Committee characteristics on the reduction of creative accounting practices in Jordanian banks at a level of significance of 0.05 except for variable (size of the Audit Committee).

How to manage corporate reputation? The effect of enterprise risk management systems and audit committees on corporate reputation

Research on corporate reputation has generally argued that reputational risk, or risk of reputation loss, stems from all company risks. As companies use enterprise risk management (ERM) systems to manage all their risks, we analyse the effect of ERM system quality on corporate reputation. Furthermore, as audit committees are in charge of supervising ERM systems, we analyse the effect of audit committee characteristics (i.e. independence and independent members' knowledge and diligence) on corporate reputation through their effect on ERM system quality. Our results for a sample of listed Spanish firms support consultants’ arguments that ERM system is a useful tool for managing corporate reputation. Our results also show that audit committee independence improves corporate reputation through the ERM system. Finally, our findings also reveal a positive relationship between the average educational level of independent directors of the audit committee and ERM system quality. These results provide evidence that ERM systems are platforms to manage corporate reputations and suggest the importance of the audit committee as a supervisor of ERM system and as guarantor of corporate reputation.

Effect of audit committee characteristics on relationship between financial distress and income maximization actions

The study aimed at obtaining empirical evidence regarding the influence of audit committee characteristics on the relationship between financial distress and income maximitation actions. The population on the current study were companies listed on the Indonesia Stock Exchange from 2015 to 2018. The sampling technique used non-probability sampling with a purposive sampling method to get 20 companies as research samples. The data analysis technique used moderated regression analysis. The test results provide empirical evidence that high financial expertise can weaken the influence of financial distress on income maximitation actions. This study also finds empirical evidence that the frequency of meetings is not a moderating effect of financial distress on income maximitation. The third hypothesis testing shows that the independence of the audit committee is able to moderate the relationship between financial distress on income maximitation.

On the effect of audit committee characteristics on corporate governance good practices index. Fresh evidence from Sudan listed firms

On the effect of audit committee characteristics on corporate governance good practices index. Fresh evidence from Sudan listed firms

Audit committee characteristics: an empirical investigation of the contribution to intellectual capital efficiency

PurposeIn a knowledge economy, it is generally agreed that audit committees play a significant role in supporting the overall firm’s knowledge, particularly enhancing the reporting process. In this respect, this paper aims to examine the effect of audit committee characteristics on intellectual capital efficiency.Design/methodology/approachThis study examined 59 banks for five years (2011-2015), obtaining 295 observations. The study’s independent variable is audit committee characteristics. The dependent variable is intellectual capital components (Human: human capital efficiency [HCE]; Structural: structural capital efficiency [SCE]; Relational: relational capital efficiency [RCE]; and Physical/Financial: capital employed efficiency [CEE]). In addition, the study used four bank-specific control variables.FindingsThe findings deduced from the empirical results demonstrate that there is a significant positive impact of audit committee characteristics on intellectual capital. Moreover, the relationship between audit committee and intellectual capital components (HCE, SCE, RCE and CEE) also has a significant positive relationship if measured individually.Originality/valueThe study provides insights about the relationship between audit committee characteristics and the improvement in intellectual capital efficiency, which might be used by firms to re-arrange the roles within audit committee, to reassign internal priorities and to escalate position in their environment.

Managerial overconfidence, ability, firm-governance and audit fees

Prior studies document that managerial overconfidence potentially increases the risk of financial misstatements, and that overconfident managers purchase lower quality audits and pay lower audit fees. As a part of the research that evaluates the information value of managerial characteristics to auditors, our study examines how the relationship between managerial overconfidence and audit fees is impacted by managerial ability, and board and audit committee effectiveness in the post-Sarbanes–Oxley (post-SOX) environment. In general, we find a significantly positive relationship between managerial overconfidence and audit fees consistent with the supply-side risk based perspective of audit pricing. However, this relationship is significantly attenuated in higher managerial ability firms where overconfident managers are better able to make proper accounting estimates and judgements required for producing reliable financial statements, and synthesize firm-specific information into appropriate forward looking projections. We find that on an average, the overconfident firms with higher managerial ability pay 6.3% lower audit fees than the overconfident firms with lower managerial ability. Our analyses further show that board characteristics positively impact the relationship between managerial overconfidence and audit fees, suggesting that stronger board monitoring increases the demand for higher quality audits to mitigate the reporting risk of the overconfident firms. On an average, the firms with managerial overconfidence pay additional 9.3% higher audit fees when they are subject to stronger and more effective board oversight. However, we find weaker evidence on the effect of audit committee characteristics on audit fees of the overconfident firms. Our primary results hold for a battery of supplemental tests including the tests using propensity-score matched sample. The study contributes to audit fee and corporate governance literature, and has useful implications for regulators, accounting practitioners, and auditors.

¿Son las características del comité de auditoría importantes para el presupuesto de auditoría interna en empresas de Malasia?

<p class="Default"><span lang="EN-US">An audit committee is viewed as an essential self-regulatory internal governance instrument that is expected to provide an oversight role over the entire process of financial reporting. An internal audit is also one of the corporate governance cornerstones that is essential for the effective monitoring of the operating performance of internal control. To ensure its effectiveness, the audit committee monitors the resources available to the internal audit, and internal control functions should be directly reported to the audit committee. This study analyses the effect of audit committee characteristics on internal audit budget in Malaysia, where data on internal audit budget is available and how well audit committee monitors the internal audit function is questionable. Our study also opens the door to an unanswered question, that is, whether an audit committee index is related to internal audit budget. Data of 96 companies listed on Bursa Malaysia for a three-year period, 2012-2014, was utilized to achieve this end. The regression results show that audit committee meeting and index are significantly and positively associated with internal audit budget. They also indicate that audit committee tenure has a significant and negative impact on internal audit budget. The findings of the study support the recent policy initiatives in relation to audit committee and internal audit. They also serve as a wake-up call to policy makers in requiring more committed and skilled members on the audit committee.</span></p>

Audit Committee Effectiveness and Company Performance: Evidence from Jordan

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.

The Effect of Audit Committee Characteristics on Financial Restatements in Malaysia

ABSTRACTThis study investigates the influence of audit committee characteristics on the likelihood of financial restatements by firms in Malaysia. Annual reports of 350 firms that have restated their financial statements in the year 2008 and 2009 are analyzed. An additional 350 firms that did not restate their financial statements are considered, resulting in a total of 700 observations. Regression analysis identifies audit committee characteristics such as its independence, size, expertise and activity as statistically significant in explaining the likelihood of financial restatements. This article highlights the important role of the audit committee in mitigating financial restatements by firms in Malaysia.

EKSPLORASI ELEMEN INTEGRATED REPORTING DALAM ANNUAL REPORTS PERUSAHAAN DI INDONESIA

This study aims to identify the patterns and scope of integrated reporting and to examine the effect of audit committee characteristics (expertise and meeting) on elements of integrated reporting disclosed in the annual report of companies listed on the Indonesia Stock Exchanges (IDX). This study used 170 annual reports of companies listed on the IDX as research data (not all companies have the required data). Research data were then analyzed using STATA / MP14 Software. The findings showed that the IDX-listed companies have presented annual reports in accordance with the elements of integated reporting although the scope of presentation was relatively low amounting of 51% (33 of 64 indicators). Furthermore, this study revealed that the audit committees’ expertise (in accounting/ finance) and the frequency of audit committee meetings positively and significantly influenced the scope of the integrated reporting presented in the annual report of the companies.

Audit Committee Characteristics and Integrated Reporting:Empirical Study of Companies Listed on the Johannesburg Stock Exchange

This study aims to investigate the effect of audit committee characteristics (audit committee expertise, frequency of audit committee meetings, and audit committee independence) on integrated reporting. Data for this study were gathered from integrated reports of manufacturing companies listed on the Johannesburg Stock Exchanges. Total samples of 58 companies were selected using purposive sampling method. A multiple regression model was then employed to analyze data. The findings showed that the level of integrated reports of the companies met 70% of all required items. In addition, the audit committee expertise and frequency of audit committee meetings positively influenced the level of integrated reports. However, this study did not support the association of independent audit committees and the companies' reports.

The effect of audit committee characteristics on compliance with IFRS for related party disclosures

PurposeThe purpose of this paper is to examine the effect of audit committee (AC) characteristics (size, independence, the number of meetings and expertise) on compliance with International Financial Reporting Standards (IFRS) for related party disclosures (CRPD) in the South African context.Design/methodology/approachThis paper is based on an analysis of the consolidated financial statements of 120 non-financial firms listed on the Johannesburg Stock Exchange (JSE) for the period 2012 to 2014. Panel regressions have been used.FindingsThe findings of this paper reveal that CRPD is positively influenced by AC independence. However, AC size and the number of AC meetings do not affect CRPD. Regarding expertise, the authors find that there is a positive and significant relationship between CRPD and have combined industry expertise with accounting and financial expertise. However, while accounting expertise by itself is associated with CPRD, industry expertise by itself is not associated with CRPD.Originality/valueTo the best of the authors’ knowledge, there are no empirical studies that have addressed the effect of AC characteristics on compliance with IFRS for CRPD.