A Shuffling Of The Guard: Audit Committee Exit As A Response To Financial Restatements

This paper conducts a meta-analysis of 182 published archival accounting and auditing studies on the corporate governance determinants of financial restatements. We aim to provide a focused and systematic examination of various internal and external corporate governance factors that may predict financial restatements. We do so by aggregating results statistically across individual studies and correcting statistical artifacts, thereby we provide findings that are much more precise than those of narrative reviews. We categorize the chosen governance variables into (a) audit firm and audit engagement characteristics; (b) gender, board attributes, and audit committee attributes; (c) CEO related attributes; (d) ownership structure variables; and (e) external corporate governance variables, and thus we generate a total of 37 separate corporate governance variables. Our results reveal that the governance mechanisms of Big N auditor choice, types, and timeliness of audit opinions and board independence are significantly and negatively associated with the occurrence of financial restatements. However, economic bonding between auditors and their clients, insider ownership, and firm complexity all increase the likelihood of restatements significantly. We hope that our findings will make a meaningful contribution to the literature on financial restatements and corporate governance by providing insights for regulators on the governance mechanisms that may require further scrutiny in combating the occurrence of financial restatements.

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Audit committee gender diversity and financial reporting: evidence from restatements

Managerial Auditing Journal ◽

10.1108/maj-10-2018-2048 ◽

2019 ◽

Vol 35 (1) ◽

pp. 67-92 ◽

Cited By ~ 1

Author(s):

Javad Oradi ◽

Javad Izadi

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Audit Committee ◽

Gender Diversity ◽

Audit Committees ◽

Related Factors ◽

Content Type ◽

Female Directors ◽

Financial Restatements ◽

Financial Expert

Purpose The purpose of this paper is to investigate the association between gender diversity on the audit committees and the incidence of financial restatements. Design/methodology/approach Using a sample of 683 firm-year observations from Iranian listed companies for the period 2013 to 2017, this paper uses a logistic regression model to examine a research hypothesis related to the association between the presence of female members on the audit committee and the incidence of financial restatements. Findings After controlling for other restatement-related factors, the authors find that the presence of at least one female member on audit committees reduces the likelihood of the incidence of financial restatements. Robustness tests also confirmed this result. Moreover, the additional analyses show that independent and financial expert female members on audit committees are more strongly associated with a reduction in financial restatements. Further, the results suggest that the presence of female members on the audit committee can increase the likelihood of hiring higher quality auditors. Generally, the findings are consistent with the literature on gender diversity which suggests that women perform better in a monitoring role, are more conservative and make more ethical decisions. Practical implications The findings of this study could help with the understanding of broader participation of female directors on company boards and subgroups such as the audit committee, and of the improvement in corporate governance. Moreover, the findings can be of particular interest to monitoring authorities and policy makers in developing countries and send positive signals to them regarding the recommendation or requirement of gender diversity as a part of corporate governance mechanisms. Originality/value The present study contributes to the extant literature by providing empirical evidence on the effect of audit committee gender diversity on financial restatements. Furthermore, this study provides evidence on the more effective oversight and greater ability of independent and financial expert female directors, which has been significantly disregarded in the previous studies.

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The Even–Odd Nature of Audit Committees and Corporate Earnings Quality

Journal of Accounting Auditing & Finance ◽

10.1177/0148558x15625438 ◽

2016 ◽

Vol 33 (1) ◽

pp. 98-122 ◽

Cited By ~ 3

Author(s):

Huasheng Gao ◽

Jun Huang

Keyword(s):

Audit Committee ◽

Earnings Quality ◽

Audit Committees ◽

Voting Theory ◽

Financial Restatements ◽

Corporate Earnings ◽

Lower Likelihood ◽

Equity Ownership

We apply voting theory to the context of audit committees and examine how the even–odd nature of audit committees is related to earnings quality. We hypothesize that an audit committee with an odd number of directors can improve the committee’s voting efficiency by better aggregating directors’ information and thus enhance the quality of committee decisions, as compared with an audit committee with an even number of directors. Supporting this implication, we find that an odd audit committee is associated with lower likelihood of financial restatements than an even audit committee, and that this relation is stronger when the committee members have more heterogeneous opinions, hold less equity ownership, are in a smaller audit committee, and face a more entrenched management.

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Committee Reports: Audit Committee

PsycEXTRA Dataset ◽

10.1037/e543632009-012 ◽

1963 ◽

Author(s):

J. Lewis Yager ◽

Marshall R. Jones

Keyword(s):

Audit Committee

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Pengaruh Good Corporate Governance Terhadap Nilai Perusahaan Dengan Variabel Intervening Profitabilitas

Kajian Bisnis STIE Widya Wiwaha ◽

10.32477/jkb.v25i1.228 ◽

2017 ◽

Vol 25 (1) ◽

pp. 13-39

Author(s):

Achmad Tjahjono ◽

Siti Chaeriyah

Keyword(s):

Corporate Governance ◽

Path Analysis ◽

Executive Director ◽

Audit Committee ◽

Positive Impact ◽

Institutional Ownership ◽

Analysis Tool ◽

Manufacturing Companies ◽

Company Value ◽

Good Corporate Governance

The Company was founded with the goal of increasing the value of the company as well as to provide prosperity for the owners or shareholders. Good Corporate Governance and profitability is an effort to enhance company value. This study aims to determine the influence of good corporate governance to company value with profitability as intervening variable. The population of this research is manufacturing companies listed in Indonesia Stock Exchange in 2010 - 2014. The sample is taken by using purposive sampling method. Under this method, as many as 123 companies were obtained. The analysis tool to test the hypothesis is path analysis with AMOS software version 21. Data analysis method is descriptive analysis, path analysis, and sobeltest. The results of this study indicate that managerial ownership, the audit committee and the profitability have positive impact toward the of the company value, institutional ownership has positive impact but not significant, non-executive director with negative effect tendency on the company value. The results of this study also showed that profitability cannot mediate the effect of good corporate governance mechanisms on company value. It can be suggested to replace the intervening variable with other variables such as quality of earnings instead of profitability since it is declined as an intervening variable. non-executive director and institutional ownership does not contribute any positive and significant effect on company value and profitability. The following research can use another proxy in the measurement process and consider other theories that could explain comprehensively.

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