scholarly journals Audit committees and insider trading at U.S. banks

2011 ◽  
Vol 8 (2, Special issue) ◽  
pp. 14-31
Author(s):  
Brian Bolton
Keyword(s):  
Firm Performance ◽  
Insider Trading ◽  
Commercial Banks ◽  
Audit Committee ◽  
Financial Statement ◽  
Audit Committees ◽  
Loan Loss ◽  
Financial Problems ◽  
Financial Condition ◽  
The Relationship

This paper studies the relationship between insider stock trades by audit committee members and financial concerns at U.S. banks during the 2000s. We initially show that banks with large amounts of discretionary loan loss accruals experience larger stock sales by audit committee members. These stock sales are then associated with banks experiencing subsequent financial problems, measured by firm performance, restatements, and the likelihood of receiving TARP assistance in 2008 and 2009. This suggests that legal insider trading by audit committee members can provide information about a bank’s financial condition and financial statement quality. While this study is focused on commercial banks, the results likely apply to larger samples and to trading by other classes of insiders.

scholarly journals INTELLECTUAL CAPITAL DISCLOSURES AND AUDIT COMPONENTS IN NON-DISCRETIONARY INCOME

2019 ◽  
Vol 9 (1) ◽  
pp. 124
Author(s):  
Saarce Elsye Hatane ◽  
Dewi Rembulan ◽  
Josua Tarigan
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Audit Committee ◽  
Audit Quality ◽  
Random Effect ◽  
Random Effect Model ◽  
Audit Committees ◽  
Net Income ◽  
The Impact ◽  
The Relationship

This study aims to determine the relationship of Intellectual Capital Disclosures (ICD), audit committee characteristics (size, gender, education, expertise), and audit quality toward the performance of the company measured through Non-Discretionary Net Income (NDNI) and Cash Flow Operation (CFO). This study is conducted on service listed companies in the Indonesia Stock Exchange (Service Industry) from 2010 to 2016 by panel data regression method analyzed using random effect model. The results of this study indicate that components in ICD have no significant impact on firm performance. Some components in the audit committees are found to have significant positive relationship towards financial performance. The empirical results suggest that ICD serve as a tool in aiding firm performance. A corporation should practice ICD extensively to enjoy the impact on the firm performance and value. Most research studies the relationship between intellectual capital disclosures and board diversity toward firm performance individually. The interaction of intellectual capital disclosures and audit committee characteristics is analyzed and studied to see whether audit committee characteristics is a factor that can help and improve the effectiveness of firm performance. Audit quality is also being analyzed and being taken into consideration as a variable. This is the first study to find the relationship towards the firm performance using NDNI and CFO as the dependent variables

The relationship between the audit committee, internal audit and firm performance

2020 ◽  
Vol 21 (3) ◽  
pp. 437-454
Author(s):  
Abdulaziz Alzeban
Keyword(s):  
Firm Performance ◽  
United Arab Emirates ◽  
Audit Committee ◽  
Internal Audit ◽  
Ordinary Least Squares ◽  
Audit Committees ◽  
Annual Reports ◽  
Limited Attention ◽  
Content Type ◽  
The Relationship

PurposeThis study explores the role played by audit committees (ACs) in illuminating the effectiveness of internal audit (IA) as a facilitator of the achievement of organisational goals, specifically examining whether the AC mediates the relationship between IA and firm performance (FP).Design/methodology/approachData are gathered from survey questionnaires directed to chief internal auditors (CIAs) and from the annual reports of 119 listed companies in Saudi Arabia (SA) and the United Arab Emirates (UAE). Ordinary least squares (OLS) regression and mediation tests are used to assess the study’s hypotheses.FindingsThe findings indicate that the independence of the AC and having members with accounting and auditing expertise mediate the effects of IA independence and size on FP. However, no such mediation is found with respect to IA competence and FP. Further, AC meetings do not mediate the effects of IA characteristics on FP. Additional measures of the tested variables determine the robustness of the obtained findings.Originality/valueWhile much research examines the relationship between FP and corporate governance (CG) mechanisms, this study considers IA, as a key element of CG, and its impact on FP, which has received more limited attention. Hence, the findings contribute to the literature by providing new understandings regarding IA as a component of CG and its relationship with FP. Furthermore, they bring additional evidence of the influence of IA upon FP, which is mediated by AC independence and expertise.

scholarly journals Establishing the relationship between an effective audit committee and infusion of a good control environment

2017 ◽  
Vol 13 (3) ◽  
pp. 52-58 ◽  
Author(s):  
Zandile Virtue Dlamini ◽  
Emmanuel Mutambara ◽  
Akwesi Assensoh-Kodua
Keyword(s):  
Audit Committee ◽  
Good Governance ◽  
Good Control ◽  
Working Environment ◽  
Audit Committees ◽  
Control Environment ◽  
Public And Private ◽  
Control Structures ◽  
Effective Performance ◽  
The Relationship

Audit Committees are a vital component of accountability and good governance for any serious organisation and have progressively been perceived as an integral part of modern control structures and control practices in both the public and private sectors. However, Audit Committees can only discharge such gigantic responsibilities in a conducive environment to provide its effective performance of certain key functions in the areas of oversight of risk management, reporting, and internal controls. Nonetheless, the enablement of such conducive environments has become a challenge to many Audit Committees. It is against this background that this study investigates the relationship between an effective audit committee and infusion of a good control environment. The study used structured and unstructured questions to investigate population comprising standing committee members and Audit Committee members. Thus this study made use of a mixed methodology to collect quantitative data as well as reviewing audit documents, such as, the Audit Committee Charter and minutes of meetings in order to ascertain the environment under which such august practices are performed. The outcome concludes that the Audit Committee which was selected for the study has the good working environment.

scholarly journals KOMITE AUDIT UNTUK MENINGKATKAN TATA KELOLA PEMERINTAHAN DAN PENYAJIAN LAPORAN KEUANGAN DALAM RANGKA PENINGKATAN KINERJA PEMERINTAH DAERAH (STUDI KASUS PEMERINTAH DAERAH KABUPATEN BELITUNG)

2014 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Alexander Ikhsan ◽  
Antar MT Sianturi
Keyword(s):  
Local Government ◽  
Audit Committee ◽  
Good Governance ◽  
Financial Statements ◽  
Financial Statement ◽  
Audit Committees ◽  
Government Performance ◽  
Qualitative Descriptive ◽  
Improved Performance

This research is a qualitative descriptive study entitled “Audit Committee to Improve Governance and Financial Statement in order to Improved Performance of Local Government (Case Study of District Government Belitung)”. The purpose of this study was to determine how much influence of the audit committee in the local government in order to improve governance and the quality of local government financial statement, and its associations with local government performance. Measuring the importance of the audit committee, which was measured using interviews with 15 respondents who have an influence on governance in the Belitung District Based on these results, we can conclude that audit committees in local government will improve the governance and the quality of local government financial statements presentation. And from the results of this study also found that the good governance and quality of local government financial statements presentation will improve the overall local government performance

scholarly journals Gender Diversity of Audit Committees and Audit Fees: Evidence from Chinese Listed Companies

2015 ◽  
Vol 7 (2) ◽  
pp. 239 ◽  
Author(s):  
Rui Xiang ◽  
Meng Qin ◽  
Craig A Peterson
Keyword(s):  
Audit Committee ◽  
Gender Diversity ◽  
Audit Fees ◽  
Listed Companies ◽  
Audit Committees ◽  
Men And Women ◽  
Public Company ◽  
Chinese Listed Companies ◽  
State Enterprises ◽  
The Relationship

<p>This paper investigates whether women, who serve on the audit committee of the board, can have a significant impact in reducing audit fees paid by China's A-share listed companies during the period 2004 to 2007. We show that audit committees composed of both men and women pay significantly smaller audit fees. The relationship is significantly greater in non-state enterprises than that exhibited by state-owned enterprises and significantly greater in companies deemed to have weak management vis-à-vis strong management. Further analysis shows that the composition of the committee is irrelevant when management is strong, regardless of whether it provides guidance for a state-owned enterprise or a strictly public company. When management is deemed weak, however, gender diversity is associated with smaller fees.</p>

scholarly journals The Impact of the Audit Committees' Properties on the Quality of the Information in the Banking Financial Reports: A Survey on Saudi Commercial Banks

2017 ◽  
Vol 10 (11) ◽  
pp. 175
Author(s):  
Mwafag Rabab’ah ◽  
Omar Al-Sir ◽  
Ali A. Alzoubi
Keyword(s):  
Commercial Banks ◽  
Audit Committee ◽  
Audit Committees ◽  
Financial Reports ◽  
Audit Team ◽  
The Impact

This study aims to identify the impact of the audit committees' properties on the quality of the information of the banking financial reports in the Saudi commercial banks by identifying the effect of identifying tasks and duties, independence, accounting and banking experience and efficiency of the audit committee on achieving the quality of the Saudi banking and financial reports. 110 questionnaires were distributed on the research sample and 105 questionnaires were received and analyzed through ANOVA. Results indicate that the availability of the audit committees' properties affect increasing the quality of the financial reports in the Saudi banking at the level of properties as a whole where the (P) probable value was (0.000 ), which is less than 0.05. It represents the functions and duties of the audit committee, the committee's independence in banks, the availability of the accounting and banking experience for the members of the audit committee and the efficiency of the audit committees at banks. The study recommends more emphasis on the diversity of the experiences of the members of the audit team and thus; the committee can performs its functions in a more efficient and effective way.

scholarly journals Board Characteristics and Firm Performance: Case of Saudi Arabia

2012 ◽  
Vol 2 (2) ◽  
pp. 168 ◽  
Author(s):  
Mohammad Ahid Ghabayen
Keyword(s):  
Firm Performance ◽  
Audit Committee ◽  
Negative Relationship ◽  
Study Data ◽  
Annual Reports ◽  
Board Composition ◽  
Board Size ◽  
Board Characteristics ◽  
The World ◽  
The Relationship

ABSTRACTCorporate governance (CG) has received much attention in the current studies all over the world especially after many corporate scandals and the failures of some biggest firms around the world such as Commerce Bank (1991) Enron (2001), Adelphia (2002), and World Com (2002).The aim of this study is to examine the relationship between board mechanisms (audit committee size, audit committee composition, board size, and board composition) and firm performance (ROA) based on the annual reports of listed companies in the year 2011 of  sample of non-financial firms in the Saudi Market (Tadawul). For the purpose of this study, data was collected from a sample of 102 non-financial listed companies.Furthermore, an analysis of regression analysis is utilized to examine the relationship between board characteristics and firm performance. The results of this study reveal that audit committee size, audit committee composition and board size have no effect on firm performance in the selected sample while board composition has a significant negative relationship with firm performance.

Fraudulent Financial Reporting: Consideration of Industry Traits and Corporate Governance Mechanisms

2000 ◽  
Vol 14 (4) ◽  
pp. 441-454 ◽  
Author(s):  
Mark S. Beasley ◽  
Joseph V. Carcello ◽  
Dana R. Hermanson ◽  
Paul D. Lapides
Keyword(s):  
Health Care ◽  
Corporate Governance ◽  
Financial Reporting ◽  
Financial Services ◽  
Audit Committee ◽  
Internal Audit ◽  
Financial Statement ◽  
Audit Committees ◽  
Financial Statement Fraud ◽  
Governance Mechanisms

This paper provides insight into financial statement fraud instances investigated during the late 1980s through the 1990s within three volatile industries—technology, health care, and financial services—and highlights important corporate governance differences between fraud companies and no-fraud benchmarks on an industry-by-industry basis. The fraud techniques used vary substantially across industries, with revenue frauds most common in technology companies and asset frauds and misappropriations most common in financial-services firms. For each of these three industries, the sample fraud companies have very weak governance mechanisms relative to no-fraud industry benchmarks. Consistent with prior research, the fraud companies in the technology and financial-services industries have fewer audit committees, while fraud companies in all three industries have less independent audit committees and less independent boards. In addition, this study provides initial evidence that the fraud companies in the technology and health-care industries have fewer audit committee meetings, and fraud companies in all three industries have less internal audit support. This study of more current financial statement fraud instances contributes by updating our understanding of fraud techniques and risk factors in three key industries. Auditors should consider the industry context as they evaluate the risk of financial fraud, and they should compare clients' governance mechanisms to relevant no-fraud industry benchmarks.

scholarly journals Audit Committee and Discretionary Loan Loss Provisions in Tunisian Commercial Banks

2018 ◽  
Vol 13 (3) ◽  
pp. 169
Author(s):  
Amina Zgarni ◽  
Hassouna Fadhila ◽  
Moez El Gaied
Keyword(s):  
Earnings Management ◽  
Commercial Banks ◽  
Regression Models ◽  
Audit Committee ◽  
Standard Errors ◽  
Loan Loss ◽  
Positive Effects ◽  
Loan Loss Provisions ◽  
Effective Role

The purpose of this paper is to study the effect of the audit committee (presence, expertise, independence, size and activity) on earnings management of banks. We selected a sample of ten Tunisian commercial banks examined over the 2001 to 2014 period. The regression models are estimated using the “Panel Corrected Standard Errors” method of Beck and Katz (1995). Our empirical results highlight the effective role of the audit committee's expertise in mitigating discretionary practices. However, the number of meetings, which is less than the standard required by regulatory authorities, does not have a significant disciplinary effect on discretionary loan loss provisions. Results also report that Audit committee’s independence and size have positive effects on discretionary loan loss provisions in our sample.

scholarly journals An Investigation IFRS Adoption in Malaysia on The Relationship between The Audit Committee and Quality of Financial Statement

2018 ◽  
Vol 2 (2) ◽  
pp. 115-122
Author(s):  
Citrawati Jatiningrum ◽  
Fauzi Fauzi ◽  
Rita Irviani ◽  
Mujiyati Mujiyati ◽  
Shahanif Hasan
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Financial Statement ◽  
Committee Meeting ◽  
Ifrs Adoption ◽  
Financial Expertise ◽  
The Relationship ◽  
Post Period

Audit committees are one of Corporate Governance (CG) mechanisms which are the significant factor in improving its role in inhibiting financial statement fraud (Choi, Jeon & Park, 2004; Habbash, 2010; Soliman & Ragab, 2014). Quality of the Financial Statement emphasised as being in compliance with accounting standards accepted in general, the disclosure scale, and reported numbers although this is not merely a task for the IFRS (Cascino & Gassen, 2010). In recent years, the issue of IFRS adoption in developed and developing countries have been a great deal of attention from many researchers. However, regarding the relationship between the Audit Committee and Quality of Financial Statement with IFRS requirements is still questioning. In fact, the results obtained from some previous researches are inconsistent. Therefore, the objectives in this study are aims to investigate whether post the mandatory IFRS adoption in Malaysia would limit earnings management practice in highlights of governance monitoring on the quality of financial reporting in this environment. This paper gives some evidence: 1) The effect of pre- and post IFRS adoption in Malaysia in the relationship between the Audit Committee and earnings management adoption. 2) examine the differences of the level earnings management on two periods of IFRS adoption in Malaysia. Quality of Financial statement in this study was measured by the level of earnings management with discretional accrual (DA) proxy. The audit committee variable measured by Audit Committee Independence (ACIND), Audit Committee Financial Expertise (ACFEX), Audit Committee Meeting (ACMEET), Audit Committee Size (ACSIZE) and control variable in this study using Board Size (BRDSIZE) and Firm Leverage (FRMLEV). The sample of this study including the two main time periods, there are pre-IFRS adoption and post-IFRS adoption. Using 81 listed companies in Malaysia as a sample, with 567 observations is analysed from 2009 to 2015 (7 years observations) with purposive judgement sampling selection. For seven years, a total of 567 observations is analysed. The pre- IFRS adoption period was tested from 2009 through 2011, and the post-IFRS adoption was tested from 2012 through the end of 2015. The findings in this study with multiplied regression analysis revealed that the hypothesis test in a period of pre- and post IFRS adoption ACFEX and FIRMLEV statistically were significance at 5% level. It means that Audit Committee Financial Expertise (ACFEX) have a significant effect on earnings management practise. According to the result found in the post IFRS adoption period, Audit Committee Meeting (ACMEET) is significant. It means that the frequency of audit committee meetings could be decreasing the level of discretionary accrual. The evidence also unveils both of ACIND and ACSIZE at 5 % level p-value is not significant. The most important result finding on pre- and post period of IFRS adoption in Malaysia provide evidence that based on the statistically significant was upward or the relation more significantly. However, this study also reported with paired sampled test analysis there was no significant difference between the level of earnings management in pre- and post period the adoption of IFRS in Malaysia at 5% level significance.  An important contribution this study has the impact on practices and has implications useful for regulators. The study provides empirical evidence that a relationship between the audit committee and earnings management in the case of IFRS adoption. In contributing to the strength of governance quality and FRQ need to be revisited, especially after mandatory IFRS adoption. Though the audit committee and audit quality are implicitly mentioned in the CG act, it is recommended that formulates specific rules relating to the quality of Financial Reporting. In this regard, it is suggested that company reports would be presented high quality in financial reporting to provide appropriate responses to recommendations made in the reports. Finally, these findings suggest that CG practices in Malaysian that have its own peculiar characteristics compared to other emerging economies.      

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