The impact of interaction between an effective audit committee and audit quality on earnings management in banks
by Amina Zgarni; Hassouna Fedhila
International Journal of Business Innovation and Research (IJBIR), Vol. 26, No. 1, 2021

Abstract: This study aims to observe the combined impact of the effectiveness of audit committee and the external audit quality in improving the financial reporting quality in the Tunisian context. More specifically, we tested the benefits, separately and simultaneously, of these two governance mechanisms in the mitigation of earnings management. The empirical study carried out with a sample containing all the commercial banks in Tunisia, that are listed on the stock market and which spans a period of 11 years since 2007 until 2017, shows that the introduction only of an effective audit committee increases earnings management. Similarly, introducing only a well-reputed external audit increases discretionary provisions. Finally, and surprisingly, we find that even the interaction of this committee and this auditor favors accounting manipulations.

Online publication date: Thu, 23-Sep-2021

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