The impact of external auditor size on the relationship between audit committee effectiveness and earnings management (original) (raw)
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Social Science Research Network, 2012
The objective of this paper is to investigate the relationship between audit committee characteristics (namely: audit committee size, financial experience, and audit committee independence) on performance, which includes financial, operating and stock performance. The study sample contained 106 corporations from the financial sector listed in the Amman Stock Exchange Market with a total of 212 observations during the 2008-2009 sample years. The results showed that the audit committee has an impact on financial and stock performance. It does not have an effect on operating performance.
The Audit Committee Characteristics and Earnings Quality: Evidence from Jordan
SSRN Electronic Journal
The aim of the paper is to investigate the relationship between audit committee characteristics and earnings management. Samples in the study included 50 industrial companies listed on the Amman Stock Exchange ASE. Two models were used to measure earnings quality: one which depends on earnings continuity as an indication of quality, and one which depends on the decrease of discretionary accruals of quality, using pooled data regression for the two tests (Ordinary Least Squares OLS and Binary Logit). The study found that there was an influence of some standard characteristics of the audit committee on earnings quality.
2021
This article examines the effect of Audit Committee characteristics such as Independence, Expertise, Size and Diligence on Earnings Management in the light of the recent past (2017) amendment in the Code of Corporate Governance in Pakistan. The study has taken a sample of 172 non-financial companies from Pakistan Stock Exchange to checks the amendment's impact on the Audit Committee composition. This study is covering 860 firm years' observations from 2013 to 2017. Pearson Correlation, Descriptive statisitcs and Random Effect Regression were employed to estimate the results.The study findings reveal that among Audit Commitee attributes, expertise in Audit Commitee is negative coefficients with both the proxies of Earning Mangement, Moreover, the coefficient values -0.171 are significantly negative with 1% in Jones (1991) model and -0.193 in Modified Jones (1995) Model, which indicates that a one percent increase in Audit Commitee expertise will reduce Earning Management by 1...
Effects of Characteristics of Audit Committee on Earnings Management inNigerian Quoted Companies
2016
The aim of this study is to examine the effect of Characteristics of Audit Committee on Eamings Management in Nigerian quoted companies. Data for the study were sourced from annual reports of one hundred and thirty one (131) companies quoted on the Nigerian Stock Exchange over the period of 2008 to 2014. The data were analysed using descriptive, correlation and Ordinary Least Square (OLS). The multivariate regression technique was utilised to estimate our model. The choice of this approach was based on the fact that our data are both time series and cross sectional. Our findings, using the panel regression results, indicate that each of these characteristics of audit committee, namely: audit committee independence, audit committee frequency of meetings and audit committee meeting attendance had a negative significant impact on eamings _ management. This implies that audit committee independence, audit commitTee frequency of meetings and audit committee meeting attendance are useful ...
SSRN Electronic Journal, 2013
Malaysian public listed companies will attempt to portray a positive outlook of business in order to provide confidence to shareholders and investors regarding the profitability and viability of the company. A key method used by the management to manage earnings and show better performance is through accrual accounting. This method of earnings management is not legally prohibited and is based main ly on the co mpany's choice of accounting policies. The negative impact on the performance of the co mpany can be directly traced to the level of earn ings management in the co mpany. The presence of the Audit Co mmittee is mandated in all Malaysian Public Listed companies by virtue of the Bursa Malaysia Listing Requirements. The monitoring and oversight factor of the Audit Co mmittee provides a check and balance mechanism which may be effect ive in curbing rampant earn ings management. This study of 153 Malaysian Public Listed companies utilises secondary data derived fro m Annual Reports of Year 2011 to ascertain the impact of Audit Co mmittee characteristics, namely frequency of Audit Co mmittee meet ings, size of Audit Co mmittee and independence of the Audit Committee, on earnings management. The pro xy for earn ings management is discretionary accruals and the modified Jones Model is used to determine discretionary accruals.
External Auditors and Earnings Management: Palestinian Evidence
Journal of University of Shanghai for Science and Technology
Managers in large companies may manipulate earnings reports to suit their desire at the detriment of shareholders and other stakeholders. This may obstruct the companies and their sustainability. The objective of this study is to examine a relationship between external audit characteristics and Earnings Management (EM) in Palestine. Secondary data is collected for a sample of 480 observations of companies listed in the PSE for the period of 2010-2019. Earnings management is measured by the level of discretionary accruals using the modified Jones model (1995). The results show that external auditors’ type is negative and significantly related to discretionary accruals and may reduce EM. However, external auditors’ independence is positive and significantly related to discretionary accruals and may increase EM. Studying the impact of external auditors’ characteristics on EMhave not been well researched in the past literature, especially in the Palestinian context.
The Influence of Audit Committee to Earnings Management
2016
The role of the audit committee continues to be of importance to regulators. The New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD) co-sponsored a Blue Ribbon Committee (BRC) to make recommendations for improving the effectiveness of the audit committee. In Indonesia, the Jakarta Stock Exchange (JSX) issued a regulation in 2001. The regulation emphasize all companies (which treaded publicly) must have audit committee. On the basis of the regulation, existing audit committee is expected to be able to restrict earnings management. According to Millstein (1999), it is totally consistent that good corporate governance practice points to the audit committee as the focal point for improvement in financial statements. This study investigates whether audit committee formation can reduce earnings management. Data is collected from JSX in 2001 and 2002 for manufacturing companies. Using independent sample t-test, the result suggests that audit committee c...
The Effect of the Presence of Audit Committees on Earnings Management in Morocco
Our paper will try emphasizing the effect of the presence of audit committees on earnings management within the Moroccan context, and most specifically in the companies listed in the Casablanca stock exchange. We have adopted previous research embedded in the Dechow, Sloan and Sweeny (1995) model of earnings management that requires a maximum of 6 companies by sector, a condition that limited our sample to 27 companies dispatched only on 4 industry sectors. Given that the companies manipulate the accruals to show the increasing results or to maintain the stock price, the role of the audit committee is to ensure that this manipulation is to be reduced in order to provide investors with accurate information. In the Moroccan context, this reduction started appearing in 2014. The years 2011, 2012 and 2013 were marked by a preparation of implementation tools of these committees mainly the integration of independent administrators within the administrative boards. However, due to lack of data, this study might be limited given the fact that the year 2016, which represented a year where the listed companies should have created an audit committee, was not covered by our study.
Global Journal of Economics and Business, 2021
This study aims to investigate empirically how the characteristics of the firm; the audit quality and the corporate governance impact the management of earnings. The population employed in this study is industrial firms listed on the Amman Stock Exchange between 2017 and 2019. The method of sampling employed in this study is purposive sampling. 39 firms are analyzed, with 117 items of data being achieved. Also, this study applies statistical testing via multiple regression. The findings show that sales growth, free cash flow, financial leverage, and return on assets all have an impact on earnings management. Meanwhile, other factors such as audit quality, firm size, audit committee, the board size, institutional ownership, and managerial ownership, have not to impact on earnings management.
The current study aimed to explore the moderate effected of independence of the audit committee on the connection between board structure (i.e. size, independence and CEO duality) and real earnings management (REM) in listed companies in Jordan. The current study covered 910 firm-year observations of the industrial and service sector listed companies in the Amman Stock Exchange (ASE) from 2009 to 2018. Using the Fixed Effect approach, the results of the data analysis show a negative and significant impact of board size and CEO duality on REM. There was, however, a significant positive correlation between board independence and REM. In general, the findings showed that the structure of the board is a determinant of REM. In the case of the moderate effect, found the audit committee independence have moderately affected the relationship between board structure and REM. In short, the findings of this study indicate that the moderate effect of audit committee independence weakens the effect of board size and CEO duality on the determination of REM while increasing the effectiveness of board independence to control of REM. Furthermore, the findings of the current study have significant implications for audit practitioners, policymakers, investors and regulators in their efforts to limit REM activities and increase the quality of Jordanian firms' financial reporting.