USF St. Petersburg campus Faculty Publications
The effect of audit committee performance on earnings quality.
Document Type
Article
Publication Date
2006
ISSN
0268-6902
Abstract
Purpose – The role of audit committees in ensuring the quality of corporate financial reporting has come under considerable scrutiny due to recent high-profile “earnings management” cases and the collapse of Enron. The purpose of this paper is to examine the association between the characteristics of audit committees (size, independence, financial expertise, activity, and stock ownership) and earnings restatement – a direct measure of earnings management. Design/methodology/approach – Univariate correlations and multivariate statistical analyses are performed. In particular, a multivariate logistic regression model is used. Findings – Evidence suggests a negative association between the size of audit committees and the occurrence of earnings restatement. The remaining four audit committee characteristics are not found to have a significant impact on the quality of reported earnings. Research limitations/implications – This study focuses on the fiscal year 2000 only. As data become available for more fiscal years, future studies may re-examine the issue. Originality/value – Results of this research provide useful information for the accounting profession, the regulators and corporations on the effective practice of audit committees.
Publisher
Emerald
Recommended Citation
Lin, J.W., Li, J.F., & Yang, J.S. (2006). The effect of audit committee performance on earnings quality. Managerial Auditing Journal, 21, 921-933. doi: 10.1108/02686900610705019
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Comments
Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.