Title: Audit committee financial expertise and RPT-conflict disclosure: insight evidence from Malaysia

Authors: Mohd Mohid Rahmat; Nurhidayah Nordin; Syaima' Adznan

Addresses: Centre for Resilience Governance and Accountability (GRACE), Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia ' Centre for Resilience Governance and Accountability (GRACE), Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia ' Centre for Resilience Governance and Accountability (GRACE), Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia

Abstract: This study aims to examine the association between having more financial experts in an audit committee and RPT-conflict disclosure among listed firms in Malaysia. This study also examines whether the audit committee's full independence and financial experts' activeness enhance the financial experts' ability to review RPT-conflicts. This study used 1,912 data observations from 478 listed firms in Bursa Malaysia for the financial years of 2011 to 2014. Our results show that having more financial experts as members in the audit committee is significantly associated with RPT-conflict disclosure. The audit committee's independence also slightly enhances the effectiveness of financial experts to review RPT-conflict. However, we found weak evidence to show that financial experts' activeness increased RPT conflict disclosure. The findings recommend a premise to have more financial experts as members in an audit committee, and full independence in interaction with the audit committee enhances the audit committee's effectiveness, specifically in reviewing RPT-conflict.

Keywords: audit committee; financial expertise; related party transactions; audit committee independence; attended meeting frequency.

DOI: 10.1504/IJAAPE.2019.106419

International Journal of Accounting, Auditing and Performance Evaluation, 2019 Vol.15 No.4, pp.355 - 377

Accepted: 24 Jul 2019
Published online: 30 Mar 2020 *

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