scholarly journals Audit Committee and Earnings Management: The Role of Gender

2020 ◽  
Vol 23 (3) ◽  
pp. 379
Author(s):  
Widya. A. Sudarman, Widi Hidayat
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Risk Averse ◽  
Gender Theory ◽  
Reporting Process ◽  
Selection Of

This study has a purpose to investigate the effect of committee audit on earnings management. Using a sampel of companies companies listed in Indonesia Stock Exchange (IDX) 2013-2017. Results of this study shows that gender of audit committee significantly effect earnings management, it explains that female on audit committee are more careful and allow for discretion in terms of financial reporting. The results explain gender theory that women are more risk averse and ethical than men. This research provides new insights for management so that they can consider gender in the selection of committee audit to be appointed by the company with regard to the financial reporting process.

scholarly journals The The Influence of Audit Tenure and Audit Committee on Earnings Quality

2018 ◽  
Vol 19 (1) ◽  
pp. 1
Author(s):  
Fatima Zakiya Razani ◽  
Liu Xia
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Listed Company ◽  
Negative Influence ◽  
Adequate Knowledge ◽  
Reporting Process ◽  
Earning Quality

One of the Auditor and Audit committee role is to ensure the quality of corporate financial reporting process. This study aims to test the effect of the length of auditor tenure and audit committee on earning quality measured by the absolute value of discretionary accruals. A sample of 465 companies has been selected and data covering the period 2009-2014 has been collected from these firms, where 2325 observation were used in this analysis. The data collected form CSMAR and analyzed using GLS regression analysis. This study found that the short audit tenure on Chinese listed company in Shenzhen Stock Exchange has a significance negative influence on earning quality, meanwhile this study found that audit committee which is measure by the size of the committee does not has a significance influence on earning quality. This study suggests that auditor should have a longer tenure to gain adequate knowledge of client’s business. Moreover companies should strengthen the role of their audit committee in monitoring financial reporting process by improved their activity and financial knowledge of the member.

scholarly journals Real Earnings Management and Audit Committee Characteristics

2019 ◽  
Vol 2 (1) ◽  
pp. 8
Author(s):  
Kamarul Abdul Manaf
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Policy Implication ◽  
Audit Committee ◽  
Real Earnings Management ◽  
Earnings Manipulation ◽  
Public Firms ◽  
Reporting Process

Whether audit committee (AC) could discharge its responsibility effectively in monitoring financial reporting process has been an important issue in accounting literature. This paper examines whether AC characteristics are important factors in constraining earnings manipulation. In particular, we examine the effect of AC competence, independence, meeting and size on real earnings management. The sample is public firms listed on Bursa Malaysia over the period 2014-2017. Our results show that AC competence is important characteristic that could curb real earnings management. As the level of competence increases, the level of real earnings management decreases. We also find that AC meeting is positively associated with real earnings management. The result suggest that AC meets more often when there are issues in financial reporting. However, AC independence and size have no relationship with real earnings management. This study provides insights on the role of AC with policy implication on regulator.

scholarly journals Earnings management, audit committee effectiveness and the role of blockholders ownership: Evidence from UK large firms

2012 ◽  
Vol 1 (4) ◽  
pp. 100-116 ◽  
Author(s):  
Murya Habbash
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Family Firms ◽  
Agency Problems ◽  
Audit Committees ◽  
Effective Control ◽  
Agency Conflicts ◽  
Controlling Shareholders

The existing literature documents that the quality of financial reporting is higher when firms have effective audit committees. However, recent studies find that audit committees are not effective in family firms where agency conflicts arise between controlling and non-controlling shareholders. This study extends the previous findings by investigating the effectiveness of audit committees in firms with similar agency conflicts when one owner obtains effective control of the firm. Compared to firms with a low level of block ownership, high-blockholder firms face less agency problems due to the separation of ownership and management, but more severe agency problems between controlling (blockholders) and non-controlling shareholders (minority shareholders). Using a unique hand-collected sample, this study tests the largest 350 UK firms for three years from 2005 to 2007, and shows that firms with effective audit committees have less earnings management. This study also documents that the monitoring effectiveness of audit committees is moderated in firms with high blockholder ownership. The results are not sensitive to the endogeneity test and hold for alternative specifications of both dependent and independent variables. Overall, these findings suggest that audit committees are ineffective in mitigating the majority-minority conflict compared to their effectiveness in reducing owners-managers conflicts. These conclusions, along with some recent similar evidence (e.g., Rose, 2009 and Guthrie and Sokolowsky, 2010), may raise doubts about the monitoring role of blockholders asserted by agency theorists and widely accepted in corporate governance literature.

scholarly journals The Moderating Effect of Gender on Audit Committee Attributes and Earnings Management

2020 ◽  
Vol 7 (3) ◽  
pp. 48
Author(s):  
Usman Abbas
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Securities And Exchange Commission ◽  
Moderating Effect ◽  
Ex Post ◽  
Ex Post Facto ◽  
Regulatory Bodies ◽  
The Impact

There exist a number of studies that have been conducted on the influence of audit committee attributes on earnings management but no attention has been given to the moderating effect of gender on audit committee attributes and earnings management. The main objective of this study was to examine the moderating effect of gender on the impact of audit committee attributes on earnings management of listed Agricultural companies in Nigeria for a period of six years (2012-2017). The study used ex-post facto and correlational research designs. The population of the study was the five (5) Agricultural companies in Nigeria listed on the Nigerian Stock Exchange as of 31st December 2017 and all the companies were used as a sample of the study. The study used a panel of multiple regression techniques for data analysis. It was found that gender has a strong and significant influence on the impact of audit committee attributes on earnings management of listed Agricultural companies in Nigeria. It was recommended that the audit committee of companies in Nigeria should comprise of at least 40% of women. Regulatory bodies concerned in Nigeria like Securities and Exchange Commission, Nigerian Stock Exchange and Financial Reporting Council should clearly state the composition of audit committee members and increase the number to ten where women should form 40% of the members of the committee and a woman with financial knowledge should be made the chairperson of the committee since women have shown a significant level of commitment to their responsibilities and contribute in reducing earnings manipulation.

The Role of Audit Firm Expertise and Knowledge Spillover in Mitigating Earnings Management through the Tax Accounts

2014 ◽  
Vol 37 (1) ◽  
pp. 3-36 ◽  
Author(s):  
Brant E. Christensen ◽  
Adam J. Olson ◽  
Thomas C. Omer
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Knowledge Spillover ◽  
Data Availability ◽  
Management Tool ◽  
Audit Firm ◽  
Reporting Process ◽  
Materiality Thresholds ◽  
National Industry

ABSTRACT Tax-related accounts are complex and often the last accounts finalized in the financial reporting process. Accordingly, these accounts can be used as a “last-chance” earnings management tool (Dhaliwal, Gleason, and Mills 2004). We investigate the extent to which an audit firm's industry expertise constrains earnings management through the tax accounts. We find that national industry audit experts constrain earnings management through the tax accounts. We also find that audit firm tax expertise constrains earnings management through the tax accounts when the audit firm is not considered an industry audit expert. Finally, we find evidence that providing both audit and tax services facilitates a nonexpert firm's ability to constrain earnings management through the tax accounts, which suggests that knowledge spillover plays an important role in reducing “last-chance” earnings management. All findings hold among smaller clients and when the extent of earnings management is below quantitative materiality thresholds. Data Availability: All data are publicly available as noted in the text.

The Implications of the Audit Committee in the Financial Reporting of the Entities Listed on the Bucharest Stock Exchange

2021 ◽  
Vol 19 (161) ◽  
pp. 156-171
Author(s):  
Alin-Constantin DUMITRESCU ◽  
◽  
Ovidiu-Constantin BUNGET ◽  
Valentin BURCA ◽  
Oana BOGDAN ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Econometric Model ◽  
Stock Exchange ◽  
Audit Committees ◽  
Decision Making Process ◽  
Policies And Procedures ◽  
Over Time

Over time social and economic events have reflected that the role of supervisory committees and especially of audit committees within entities is essential for ensuring sustainable development, increasing transparency and confidence. The purpose of the paper is to study the role of the audit committee in the financial reporting process of the companies listed on the Bucharest Stock Exchange in the period 2015-2019. The proposed econometric model shows that the management of the entity is oriented towards reducing deficiencies and non-compliances with internal policies and procedures, giving internal control a central role in the decision-making process.

The Impact on Auditor Judgments of CEO Influence on Audit Committee Independence

2011 ◽  
Vol 30 (4) ◽  
pp. 129-147 ◽  
Author(s):  
Jeffrey R. Cohen ◽  
Lisa Milici Gaynor ◽  
Ganesh Krishnamoorthy ◽  
Arnold M. Wright
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Data Availability ◽  
Audit Committees ◽  
Undue Influence ◽  
Management Incentives ◽  
Auditor Judgments ◽  
The Impact ◽  
Selection Of

SUMMARY Despite the importance of audit committee independence in ensuring the integrity of the financial reporting process, recent research suggests that even when audit committees meet regulatory independence requirements, certain factors, such as undue influence by the CEO over the selection of the audit committee, may diminish the ability of its members to be substantively independent. This study investigates whether auditors consider CEO influence over audit committee independence when making audit judgments where management's incentives to manage earnings differ. In an experiment, we find that audit partners and managers waive a larger amount of a proposed audit adjustment when management's incentives for earnings management are low than when incentives are high. However, when management incentives are high, auditors are less likely to waive as much of an adjustment when the CEO has less influence over the audit committee's independence than when the CEO's influence is greater. In all, the results support our expectations that auditors consider CEO influence on audit committee independence in the resolution of contentious accounting issues. Data Availability: Contact the authors.

scholarly journals The effect of audit committee characteristics on financial reporting quality: The moderating role of audit quality in the Netherlands

2021 ◽  
Vol 18 (3) ◽  
pp. 19-30 ◽  
Author(s):  
Sana Mardessi Masmoudi
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Audit Quality ◽  
Reporting Quality ◽  
Ordinary Least Squares ◽  
Real Earnings Management ◽  
Financial Reporting Quality ◽  
Moderating Role

The purposes of this study are to shed light, on the one hand, on the effect of audit committee characteristics, namely independent members in audit committee, a financial expert in audit committee, frequency of meetings and audit committee size on financial reporting quality proxied by real earnings management. On the other hand, it aims to investigate the moderating role of audit quality in the relationship between audit committee characteristics and financial reporting quality. The objective is to contribute to the new evidence on the role of audit committee characteristics towards the financial reporting quality with audit quality as a moderator, particularly the appointment of Big 4 company. This study uses the ordinary least squares (OLS) regression to achieve the research purpose by evaluating the data collected from 90 public listed companies from 2010 to 2019 in the Dutch context. The results state that audit committee characteristics have a statistically significant relationship with real earnings management. However, the effect of audit committee meetings on abnormal operating cash flow and discretionary expenses is not significant. There is also evidence that audit quality positively moderates the audit committee and real earnings management links. Lastly, the findings of this study will help professional accountancy bodies and governments to highlight the relevance of earnings management in safeguarding trustworthy financial information, owners’ wealth and to enhance audit committee characteristics in improving audit quality, especially after the enforcement of the Dutch Corporate Governance Code in 2016.

scholarly journals Analysis of Fraudulent Financial Reporting With the Role of KAP Big Four as a Moderation Variable: Crowe's Fraud's Pentagon Theory

2020 ◽  
Vol 11 (5) ◽  
pp. 180
Author(s):  
Maylia Pramono Sari ◽  
Nindya Pramasheilla ◽  
Fachrurrozie ◽  
Trisni Suryarini ◽  
Imang Dapit Pamungkas
Keyword(s):  
Financial Reporting ◽  
Financial Stability ◽  
Audit Committee ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Fraudulent Financial Reporting ◽  
Ceo Duality ◽  
Fraud Risk ◽  
Big Four

The purpose of this study is to provide empirical evidence of pentagon fraud risk factors sush as financial targets, financial stability, number of audit committee members, nature of industry, change in auditors, auditor opinion, change in director, proportion of the independent commissary, frequent number of CEO pictures, and CEO duality on fraudulent financial reporting with KAP big four as a moderating variable. The samples in this study were all state-owned companies listed on the Indonesia Stock Exchange in 2014-2018. The purposive sampling technique was used in sampling so that 55 companies were obtained. This study uses logistic regression analysis techniques with SPSS version 26. The results of the study indicate that financial stability and the auditor's opinion influence the fraudulent financial reporting. However, financial targets, number of audit committee members, nature of industry, change in auditors, change in director, proportion of the independent commissary, frequent number of CEO pictures, and CEO duality not effect on fraudulent financial reporting.

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