scholarly journals Effect of Audit Quality on Earnings Management in Insurance Companies in Nigeria e

2021 ◽  
Vol 7 (2) ◽  
pp. 173-202
Author(s):  
Chizoba Mary Nwoye ◽  
Alphonsus Sunday Anichebe ◽  
Ifeanyi Francis Osegbu
Keyword(s):  
Earnings Management ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Audit Committee ◽  
Audit Quality ◽  
Financial Institution ◽  
Audit Fees ◽  
Audit Committees ◽  
Insurance Companies ◽  
And Performance

The main objective of the study is to determine the effect of audit quality on earnings management in insurance companies in Nigeria with special consideration on accruals and performance measures of earning manipulations using insurance companies in Nigeria. Preliminary analyses were conducted, such as descriptive statistics and correlation matrix. In analyzing the data, the study adopted panel multiple regression to identify the possible effects of audit quality on earnings management of financial institutions in Nigeria We interpreted fixed effect analysis after using Hausman test. The result shows that audit quality had a significant effect on earnings management. We conclude that longer stay of auditors in financial institutions increases accrual and performance manipulation. However, financial institutions audited by the Big 4 auditing firms are associated with less accrual and performance earnings manipulation while financial institutions that have executive and non-executive directors as members of audit committee have greater accrual and performance earnings manipulations. Higher number of financial experts in audit committee increases accrual manipulation while higher number of experts with accounting background in audit committee reduces performance manipulating. Finally, increase in auditors’ fee leads to choices of using accounting methods to manipulate both accrual and performance earnings. Therefore, the study recommends that, financial institutions should have maximum number of years for auditors to stay. They should focus more on increasing the number of experts with accounting background in audit committees. Accounting bodies should regulate auditors’ fee in line with the size of the financial institution. (JEL M42) Keywords: Audit Fees, Audit Committee Independence, Audit Firm Size, Audit Quality, Earnings Management, Financial Literacy of Audit Committee Members, Length of Audit Tenure.

scholarly journals The Effects of Corporate Governance Practices on the Choice between Efficient and Opportunistic Earnings Management

2016 ◽  
Vol 11 (9) ◽  
pp. 1
Author(s):  
Tim Vervaat ◽  
Georgios Georgakopoulos ◽  
Konstantinos Z. Vasileiou ◽  
Ioannis Sotiropoulos
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Audit Quality ◽  
Audit Fees ◽  
Audit Committees ◽  
Outside Directors ◽  
Study Results ◽  
Governance Practices ◽  
The Impact

This study aims to explore the preferences of the publicly listed companies on the S&P 500 index regarding their earnings management (efficient or opportunistic) as well as the impact of the corporate governance practices (audit committee, board independence and audit quality) on their decision. Using two separate regression models, it was found that American firms listed on the S&P 500 index tend to conduct efficient earnings management, which is in line with the findings of prior research. Moreover, it emerged that the earnings management selection does not depend on the amount (high vs small) of audit fees paid by the companies. Additionally, the governance practice of employing more outside directors in the audit committees leads to more efficient earnings management. Finally, according to the study results, the impact of discretionary accruals on future profitability is not significantly related to the proportion of independent members on the board of directors.

Gender diversity on audit committees and its impact on audit fees: evidence from India

2019 ◽  
Vol 32 (4) ◽  
pp. 568-586 ◽  
Author(s):  
Seema Miglani ◽  
Kamran Ahmed
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Gender Diversity ◽  
Audit Fees ◽  
Ordinary Least Squares ◽  
Audit Committees ◽  
Women Directors ◽  
Least Squares Regression ◽  
Content Type ◽  
Financial Expert

Purpose The purpose of this study is to examine the relationship existing between gender diverse (women directors) audit committees and audit fees. Design/methodology/approach The authors use a sample of 200 listed Indian firms over a four-year period (2011-2014). Ordinary least squares regression is used to assess whether and how the presence of women directors on audit committees affects the fee paid to the external auditor in India. To deal with the self-selection bias, the authors use a two-stage model developed using Heckman’s (1976) method. Findings The results show a significant positive relationship between the presence of a woman financial expert on the audit committee and audit fees after controlling for a number of firm-specific and governance characteristics and potential endogeneity with the propensity-matching score analysis. From the demand-side perspective of audit pricing, the results indicate that women financial experts on audit committees increase the need for assurance provided by external auditors. Using interaction terms, the authors find that women with financial expertise on an audit committee have a stronger association with audit fees as entity becomes more complex. Research limitations/implications The findings suggest that audit committees with women financial experts are likely to demand higher audit quality, ceteris paribus. Practical implications Gender of the financial expert is critical to the audit committee’s effectiveness. The findings of this study have implications for the composition of an audit committee in a firm. Originality/value This study contributes to the extant literature by examining the less-researched topic of the association between the women representation on audit committees and audit fees. It also offers further empirical evidence that will influence the debate on the importance of gender diversity in corporations.

The impact of audit committee effectiveness on audit fees and non-audit service fees

2018 ◽  
Vol 31 (2) ◽  
pp. 174-191 ◽  
Author(s):  
Muhammad Jahangir Ali ◽  
Rajbans Kaur Shingara Singh ◽  
Mahmoud Al-Akra
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Audit Fees ◽  
Audit Committees ◽  
Regulatory Requirements ◽  
Content Type ◽  
Financial Expertise ◽  
The Difference ◽  
Accounting Expertise ◽  
The Impact

Purpose The purpose of this study is to examine the impact of audit committee effectiveness on audit fees and non-audit service (NAS) fees in a less regulatory environment. Design/methodology/approach The authors construct a composite audit committee effectiveness measure incorporating audit committee independence, diligence, size, financial expertise and the chairperson’s accounting expertise. Findings The authors find that audit committee effectiveness has a positive significant impact on both audit fees and NAS fees. This suggests that effective audit committees can hold auditors accountable resulting in better audit quality and consequently higher audit fees. Originality/value The link between more effective audit committees with higher NAS purchases can be explained in light of the difference in regulatory requirements providing audit committees with decision rights on the use of NASs, therefore approving more NAS and increasing NASF. Additional tests and robustness analyses confirm the results.

scholarly journals Affiliated Former Partners on the Audit Committee: Influence on the Auditor-Client Relationship and Audit Quality

2018 ◽  
Vol 38 (3) ◽  
pp. 95-119 ◽  
Author(s):  
Brant E. Christensen ◽  
Thomas C. Omer ◽  
Marjorie K. Shelley ◽  
Paul A. Wong
Keyword(s):  
Quality Improvement ◽  
Social Identity ◽  
Social Identity Theory ◽  
Audit Committee ◽  
Audit Quality ◽  
Audit Fees ◽  
Audit Committees ◽  
Client Relationship ◽  
External Auditor ◽  
Jel Classifications

SUMMARY Researchers and practitioners have expressed the need to understand better the interactions between audit committees and auditors and how these interactions affect audits. Former partners affiliated with the external auditor and serving on the audit committee are a subset of audit committee members who can affect the audit. Consistent with social identity theory, we find that companies with an affiliated partner on their audit committee are less likely to dismiss the member's former firm than companies without the affiliation. Further, we find improved audit quality and increased effectiveness of auditor effort when affiliated partners serve on the audit committee. Finally, this quality improvement occurs contemporaneously with a reduction in audit fees and time spent on fieldwork, suggesting increased efficiency. Our study provides evidence that affiliated former partners on audit committees extend the tenure of the auditor-client relationship while also improving audit processes and outcomes. JEL Classifications: M4; M42; G3.

scholarly journals Trend of Profit Management in the Company Financial and Non Financed Registers in Indonesia Exchange

2020 ◽  
Vol 4 (3) ◽  
pp. 423-435
Author(s):  
Okti Duwi Lestari ◽  
Yuli Chomsatu Samrotun
Keyword(s):  
Earnings Management ◽  
Research Method ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Insurance Companies ◽  
Insurance Company ◽  
Independent Variables ◽  
Independent Variable

This study aimsto determine the tendency of earnings management in financial and non-financial companies listed on the Indonesia Stock Exchange. This Analysis uses independent variables of institutional ownership, audit committee, independent commissioner, audit quality and leverage as well as for the independent variable earnings management. The datasource of this research isq uantitative data obtained from andiinon-finance (hotels & tourism) for the 2016-2018 period. The research method uses purposive sampling and statistical methods using multiple linearregression analysis. The sample of this studyiwas 10 insurance companies and 7 hotels & tourism companies within a period of 3 years producing 51 samples. The results of this study indicate that the tendency of earnings management is more influenced byinsurance companies, institutional ownership variables independent commissioners and leverage have an effect on earnings management and audit committee variables and audit quality have no effect. Whereas The influential hotel & insurance company variables are only independent commissioners and audit quality.  

scholarly journals The Impact of Audit Committe Characteristics on Audit Quality

2020 ◽  
Vol 23 (3) ◽  
pp. 363
Author(s):  
Paradisa Sukma, Yustrida Bernawati
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Audit Fees ◽  
Audit Committees ◽  
Observation Data ◽  
Manufacturing Companies ◽  
Ols Regression ◽  
The Impact

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.

scholarly journals Financial instruments disclosure: Do audit committee and audit quality matter?

2021 ◽  
Vol 8 (2) ◽  
pp. 51-64
Author(s):  
Adamu Garba Zango
Keyword(s):  
Financial Institutions ◽  
Audit Committee ◽  
Audit Quality ◽  
Insurance Companies ◽  
Empirical Literature ◽  
Financial Instruments ◽  
Method Of Moment ◽  
Reverse Causality ◽  
Committee Meeting

This study was motivated by a dearth of empirical literature on the relationship between audit committee characteristics, audit quality and financial instruments disclosure of a developing country. From the Nigerian Stock Exchange, up to date records over the period of three years (that is, from 2016 to 2018) were sourced from the sample size of all the 20 commercial banks and selected 30 insurance companies. After considering the dual role of audit committee as monitors to shareholders wealth and advisors for transparent managerial action based on quality audit information, the empirical analysis which employs a generalised method of moment estimator (GMM) that account for endogeneity concerns (simultaneity, reverse causality and unobserved heterogeneity)indicate that, audit committee meeting frequency (log acm) and audit quality positively and significantly relates to financial instruments disclosure each at 5% level. This result indicates the incentivizing role of audit on the new regulation as it applies to financial institutions in Nigeria. Moreover, firm size (log fsize) is positively related to financial instruments disclosure at 5% level of significance. On the contrary, this study found no significant relationship existing amongst audit committee size and financial instruments disclosure and audit committee meeting frequency and financial instruments disclosure of financial institutions in Nigeria. The study’s implications in the Nigerian context have been discussed.

scholarly journals Banks’ audit committees, audit firm alumni and fees paid to audit firm

2019 ◽  
Vol 34 (7) ◽  
pp. 783-807 ◽  
Author(s):  
Kim Ittonen ◽  
Emma-Riikka Myllymäki ◽  
Per Christen Tronnes
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Design Methodology ◽  
Audit Fees ◽  
Audit Committees ◽  
Committee Chair ◽  
Content Type ◽  
Audit Firm ◽  
Audit Firms ◽  
Non Audit Services

Purpose This paper focuses on bank audit committees and examines whether audit committee members who are former auditors are associated with the acquisition of audit and non-audit services from their former employers. Design/methodology/approach The study empirically examines a sample of large banks that are included in the S&P Composite 1500. Findings The paper reports significantly lower audit fees and a higher proportion of non-audit fees to total fees when the audit committee chair is an alumnus of the incumbent audit firm. Moreover, additional analysis reveals that these findings are stronger for banks with more earnings management. Research limitations/implications Overall, the findings indicate that audit firms might consider banks using their alumni as audit committee chairs to be less risky or easier to audit, thus requiring relatively less effort from the auditors. The reduced effort required to audit clients with audit firm alumni on their audit committees then has the effect of reducing the audit fees charged. Alternatively, their auditing experience and cognitive proximity might influence the assessment of the need for auditing or the ability to negotiate lower audit fees on the part of audit firm alumni. Originality/value This paper provides empirical evidence of the association between audit firm alumni in influential positions on an audit committee and fees paid to those audit firms in the banking industry. The findings contribute to the literature by suggesting that banks with affiliated former auditors chairing their audit committees not only have significantly lower audit fees but also a higher proportion is spent on non-audit services.

scholarly journals PENGARUH EFEKTIVITAS DEWAN KOMISARIS DAN KOMITE AUDIT, STRUKTUR KEPEMILIKAN, DAN KUALITAS AUDIT TERHADAP MANAJEMEN LABA

2018 ◽  
Vol 17 (2) ◽  
pp. 97 ◽  
Author(s):  
Eka Lestari ◽  
Murtanto Murtanto
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Audit Committees ◽  
Managerial Ownership ◽  
Company Performance ◽  
Concentrated Ownership

<p><em>The purpose of this study was to examine, analyze, and find empirical evidence of the influence the effectiveness of the board of commissioners and audit committee, concentrated ownership, managerial ownership, institutional ownership, and audit quality on earnings management with company size, company performance, and leverage as variable controls. The sample used in this study was 42 companies listed on the Indonesia Stock Exchange (IDX) in period 2013-2015. The sampling technique used was purposive sampling. This study used multiple regression analysis. The results of this study show that effectiveness of the board of commissioners, concentrated ownership, managerial ownership have negative effect on earnings management. However, the effectiveness of audit committees, institutional ownership, and audit quality doesn’t have effect on earnings management. As well, the firm size, firm performance, and leverage have effect on earnings management.</em></p>

scholarly journals AUDIT QUALITY, AUDIT COMMITTEE, INSTITUTIONAL OWNERSHIP AND INDEPENDENT DIRECTOR ON EARNING MANAGEMENT

2021 ◽  
Vol 13 (1) ◽  
pp. 42-50
Author(s):  
Ni Putu Desy Cristiana Yanthi ◽  
Dudi Pratomo ◽  
Kurnia Kurnia
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Audit Quality ◽  
Institutional Ownership ◽  
Audit Committees ◽  
Earning Management ◽  
Independent Director ◽  
Observation Data ◽  
Manufacturing Companies ◽  
Quality Audit

This study aims to analyze audit quality, audit committees, institutional ownership and independent director on earnings management at manufacturing companies listed on the Indonesia Stock Exchange in 2012-2016. The sampling method use purposive sampling for 5 years so its obtained 160 observation data samples. The results in this study indicate that earnings management that occur is the type of income decreasing. Simultaneously audit quality, audit committee, institutional ownership and independent directors significantly influence on income decreasing. Partially, audit quality and independent director variables have a negative effect on income decreasing. While audit committee independence has a positive effect on income decreasing. Furthermore, audit quality, audit committees, and institutional ownership have no effect on earning management type income decreasing.

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