Title: Corporate governance: earnings management linkages: impact of audit committee composition and operational characteristics

Authors: S. Mitchell Williams, Greg Tower

Addresses: Singapore Management University, #05 – 11, 469 Bukit Timah Road, 259756, Singapore. ' School of Accounting, Curtin University of Technology, GPO Box U1987, Perth, Western Australia 6845, Australia

Abstract: Our study documents a comprehensive simultaneous analysis of the association between five-audit committee composition and operational characteristics features and earnings management based on a sample of 485 organisational-years of Singapore publicly traded organisations. Findings provide only partition support for the view organisations with a higher proportion of independent audit committee members are more effective at constraining earnings management. Organisations with audit committees that are more diligent and/or lack the presence of independent directors serving simultaneously on a substantial number of boards and committees are more effective at constraining earnings management. Audit committee expertise and the presence of a senior executive director on the committee do not appear to influence the committee|s ability to constrain earnings management. Our findings are robust to alternative income-incentives facing corporate management and entices associated with different levels of ownership concentration. Overall, our findings are rich with policy and practical implications.

Keywords: earnings management; audit committees; ownership concentration; income-earnings incentives; Singapore; corporate governance; audit committee composition; audit committee membership.

DOI: 10.1504/IJAAPE.2004.006354

International Journal of Accounting, Auditing and Performance Evaluation, 2004 Vol.1 No.4, pp.401 - 431

Available online: 24 Feb 2005 *

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