Title: How external auditor quality moderates the relation between internal audit committee effectiveness and accounting conservatism

Authors: Saif Ur-Rehman; Faisal Khan; Dalia Ali Mostafa Hemdan; Hashim Khan

Addresses: Center for Corporate Reporting, Finance and Tax, Nyenrode Business Universiteit, Breukelen, The Netherlands ' Department of Accounting and Finance, City University College Ajman, UAE ' Department of Accounting, Universiti Teknologi Mara (UiTM), Malaysia ' Faculty of Management, COMSATS University Islamabad, Pakistan

Abstract: This study examines the effect of audit committee on two measures of accounting conservatism. In addition, this study also investigates the interaction effect of exogenous variable (i.e., external auditor quality) on relationship between audit committee effectiveness and two measures of accounting conservatism. A total of 38 sample firms are selected from the Nasdaq Dubai for the period from 2013 to 2017. In addition, some information relating to audit committee and auditor quality are collected from firms' annual reports. For data analysis, panel data methodology is employed and multiple regression analysis technique is used to test the developed hypotheses of this study. Results show that interaction effect of external auditor quality found to be significant with one-year-lagged effect on both measures of conservatism. The findings of this study contribute to the signalling theory, agency theory, reputation theory and accounting conservatism literature with lagged effect in emerging economies settings.

Keywords: accounting conservatism; signalling theory; lagged effect; Nasdaq Dubai listed firms.

DOI: 10.1504/AJFA.2021.117205

American Journal of Finance and Accounting, 2021 Vol.6 No.3/4, pp.252 - 265

Accepted: 02 Jun 2020
Published online: 23 Aug 2021 *