Audit committee experts and earnings quality

Purpose – The purpose of this paper is to investigate the relationship between audit committee expertise and financial reporting quality. Since the Sarbanes Oxley Act, 2002, there has been growing interest in the research concerning audit committee expertise, especially as the Security Exchange C...

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Main Authors:	Nelson, Sherliza Puat, Devi, Susela
Format:	Article
Language:	English
Published:	Emerald Group Publishing Limited 2013
Subjects:	H Social Sciences (General) HB Economic Theory
Online Access:	http://irep.iium.edu.my/31976/ http://irep.iium.edu.my/31976/ http://irep.iium.edu.my/31976/ http://irep.iium.edu.my/31976/1/Audit_committee.pdf

id	iium-31976
recordtype	eprints
spelling	iium-319762013-09-11T12:05:17Z http://irep.iium.edu.my/31976/ Audit committee experts and earnings quality Nelson, Sherliza Puat Devi, Susela H Social Sciences (General) HB Economic Theory Purpose – The purpose of this paper is to investigate the relationship between audit committee expertise and financial reporting quality. Since the Sarbanes Oxley Act, 2002, there has been growing interest in the research concerning audit committee expertise, especially as the Security Exchange Commission requires firms to identify their audit committee financial experts. Design/methodology/approach – Based on two theories, the resource dependence theory and agency theory, the study examines the association of audit committee experts with financial reporting quality, proxied by earnings management. Samples involved 2008 financial data of 300 firms that were ranked by highest market capitalisation. In total, four types of expertise are developed based on academic qualification, professional qualification and work experience. Findings – Presence of non-accounting experts and accounting experts is significant to reduce the magnitude of earnings management. Other than that, leverage and firms size are also found to be significant. Originality/value – The findings show RDT is prevalent in accounting or auditing domain, where there is evidence showing directors bridge firms with external resources such as expertise and experience. Subsequently, contribute to the mainstream accounting literature that the resource dependence theory is also vital in explaining situations where directors’ expertise and knowledge are involved. Emerald Group Publishing Limited 2013 Article PeerReviewed application/pdf en http://irep.iium.edu.my/31976/1/Audit_committee.pdf Nelson, Sherliza Puat and Devi, Susela (2013) Audit committee experts and earnings quality. Corporate Governance, 13 (4). pp. 335-351. ISSN 1472-0701 http://dx.doi.org/10.1108/CG-02-2011-0009 doi:10.1108/CG-02-2011-0009
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	H Social Sciences (General) HB Economic Theory
spellingShingle	H Social Sciences (General) HB Economic Theory Nelson, Sherliza Puat Devi, Susela Audit committee experts and earnings quality
description	Purpose – The purpose of this paper is to investigate the relationship between audit committee expertise and financial reporting quality. Since the Sarbanes Oxley Act, 2002, there has been growing interest in the research concerning audit committee expertise, especially as the Security Exchange Commission requires firms to identify their audit committee financial experts. Design/methodology/approach – Based on two theories, the resource dependence theory and agency theory, the study examines the association of audit committee experts with financial reporting quality, proxied by earnings management. Samples involved 2008 financial data of 300 firms that were ranked by highest market capitalisation. In total, four types of expertise are developed based on academic qualification, professional qualification and work experience. Findings – Presence of non-accounting experts and accounting experts is significant to reduce the magnitude of earnings management. Other than that, leverage and firms size are also found to be significant. Originality/value – The findings show RDT is prevalent in accounting or auditing domain, where there is evidence showing directors bridge firms with external resources such as expertise and experience. Subsequently, contribute to the mainstream accounting literature that the resource dependence theory is also vital in explaining situations where directors’ expertise and knowledge are involved.
format	Article
author	Nelson, Sherliza Puat Devi, Susela
author_facet	Nelson, Sherliza Puat Devi, Susela
author_sort	Nelson, Sherliza Puat
title	Audit committee experts and earnings quality
title_short	Audit committee experts and earnings quality
title_full	Audit committee experts and earnings quality
title_fullStr	Audit committee experts and earnings quality
title_full_unstemmed	Audit committee experts and earnings quality
title_sort	audit committee experts and earnings quality
publisher	Emerald Group Publishing Limited
publishDate	2013
url	http://irep.iium.edu.my/31976/ http://irep.iium.edu.my/31976/ http://irep.iium.edu.my/31976/ http://irep.iium.edu.my/31976/1/Audit_committee.pdf
first_indexed	2023-09-18T20:46:08Z
last_indexed	2023-09-18T20:46:08Z
_version_	1777409687584505856

Audit committee experts and earnings quality

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