Authors: Anis Ben Amar
Addresses: Department of Accounting and Law, Graduate Business School of Sfax, University of Sfax, Airport Road km 4.5 - BP, n 1081-3018, Sfax, Tunisia
Abstract: Using data for 1996-2000, Yang and Krishnan found no significant association between either audit committee's independence or audit committee's financial expertise and quarterly discretionary accruals. This study examines the effect of audit committee financial experts on earnings management. Using a sample of 425 firm-year observations for the years 2001-2005, we find that an audit committee consisting mostly of independent financial expert directors seems to have a negative and significant effect on discretionary accruals. We interpret our evidence as follows. It is not enough to have an audit committee that satisfies the financial expertise requirements. These results suggest several important implications for the regulators of certain countries intending to improve the characteristics of audit committees.
Keywords: earnings management; audit committees; financial expertise; independent directors; discretionary accruals.
International Journal of Managerial and Financial Accounting, 2014 Vol.6 No.2, pp.156 - 166
Available online: 29 Aug 2014 *Full-text access for editors Access for subscribers Purchase this article Comment on this article