Download or read book Discussion of Audit Committee Financial Expertise and Earnings Management written by Rachel M. Hayes and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Badolato et al. (2014) (BDE) examine the effectiveness of audit committee financial expertise. They find that financial expertise does not deter irregularities unless the audit committee also has high status. I review prior research on financial expertise to place the current study in the literature and for guidance in assessing the paper's assumptions and empirical specifications. BDE's conclusions run counter to many of the prior findings and to broad patterns in the data. I discuss how empirical research design choices and self-selection may affect the paper's conclusions.

Download or read book Audit Committees written by Frank M. Burke and published by CCH. This book was released on 2008-08 with total page 468 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Audit Committee Financial Expertise and Earnings Management written by Patrick Badolato and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulatory pressure to increase both audit committee financial expertise and board independence has resulted in lower status for audit committees relative to management. This status differential is relevant because expertise and relative status are important determinants of each party's ability to influence outcomes, particularly when parties face conflicting goals. We find that audit committees with both financial expertise and high relative status are associated with lower levels of earnings management, as measured by accounting irregularities and abnormal accruals. These results speak to benefits and limitations of financial expertise, which have been the focus of considerable debate.

Download or read book Audit Committee Financial Expertise Competing Corporate Governance Mechanisms and Earnings Management written by Joseph V. Carcello and published by . This book was released on 2008 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: A prime objective of the Sarbanes-Oxley Act and recent changes to stock exchange listing standards is to improve the quality of financial reporting. We examine the associations between audit committee financial expertise and alternate corporate governance mechanisms and earnings management. We find that both accounting and certain types of non-accounting financial expertise reduce earnings management for firms with weak alternate corporate governance mechanisms, but that independent audit committee members with financial expertise are most effective in mitigating earnings management. Importantly we find that alternate corporate governance mechanisms are an effective substitute for audit committee financial expertise in constraining earnings management. Finally, we find either no association or a positive association between financial expertise and real earnings management. Our results suggest that alternate governance approaches are equally effective in improving the quality of financial reporting, and that firms should have the flexibility to design the particular set of governance mechanisms that best fit their unique situations.

Download or read book Earnings Management and Corporate Governance An Investigation of Financial Statement Reporting of Publicly Listed Companies in Nigeria written by Ademola Akinteye and published by GRIN Verlag. This book was released on 2019-12-09 with total page 862 pages. Available in PDF, EPUB and Kindle. Book excerpt: Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measured by the reporting line of the holder of this role. In some sectors, the ingredients of strong corporate governance were missing thus suggesting a need for a more stricter regime of corporate governance to be implemented in these corporations.

Download or read book The Influence of Audit Committee Financial Expertise on Earnings Quality written by Bo Qin and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: An audit committee with financial expertise is expected to strengthen the firms' internal control system, and consequently, contribute to reliable and relevant financial reporting. The controversial definition of financial expert was intensively commented on before the Securities and Exchange Commission (SEC) stipulated the final rules. In this study, the author examines whether the impact of audit committee's financial expertise on earnings quality as measured by returns-earnings relation varies with the way the financial expert is defined. The results indicate that the firms with an accounting-literate professional serving on the audit committee are more likely to have high quality of reported earnings than others without such an expert. In addition, the size of the audit committee with accounting-related expertise has a positive impact on earnings quality. In contrast, the presence of a financial expert under SEC final definition is not significantly related to earnings quality. The results are robust with other influential factors, such as earnings growth, persistence, firm size, and industry specificity, taken into account.

Download or read book Audit Committees and Quarterly Earnings Management written by Joon S. Yang and published by . This book was released on 2014 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulators have frequently expressed concerns about corporate earnings management. Audit committees are expected to monitor managers' tendencies to manipulate their earnings numbers. The extant literature until now has focused on managers' incentives to manipulate annual earnings numbers. However, managers also have incentives to manage quarterly earnings, due for example, to pressures to meet quarterly analyst forecasts. We test whether audit committees with certain characteristics curb managers' ability to engage in quarterly earnings management. We examine the following characteristics of audit committees: their independence, number of meetings, financial expertise, stock ownership, outside directorships, tenure, and number of directors.Using a sample of 896 firm-year observations for the years 1996-2000, we report three findings. First, the number of outside directorships held by audit committee directors is negatively associated with earnings management behavior. This could reflect possible independence of these directors because of their desire to maintain their reputations or their expertise in dealing with financial reporting issues. Second, we find that stock ownership by independent audit committee directors is positively associated with earnings management. The monitoring benefits of independent directors seem to be eroded in situations where they are given stock ownership. Moreover, in our sample, it is mainly the independent directors that own stock. Although we do not know how generalizable this finding is, it suggests that stock ownership by audit committee directors is undesirable. Third, the average tenure of audit committee directors is negatively associated with quarterly earnings management suggesting a possible positive effect of experience with the firm and its accounting. Our results are robust to two different measures of quarterly earnings management.

Download or read book Audit Committees and Quarterly Earnings Management written by Joon S. Yang and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulators have frequently expressed concerns about corporate earnings management. Audit committees are expected to monitor managers' financial reporting, including attempts to manipulate earnings numbers. The extant literature has focused on managers'incentives to manipulate earnings numbers. However, managers also have incentives to manage earnings, due to, for example, pressures to meet quarterly analyst forecasts. We test the association between audit committee characteristics and measures of quarterly earnings management. Using a sample of 896 firm-year observations for the years 1996-2000, we report three findings. First, quarterly earnings management is lower for firms whose audit committee directors have greater governance expertise. Second, the extent of stock ownership by audit committee directors is positively associated with quarterly earnings management. Third, the average tenure of audit committee directors is negatively associated with quarterly earnings management.

Download or read book Audit Committee s Effectiveness and Financial Reporting Quality written by Nurul Nazlia Jamil and published by LAP Lambert Academic Publishing. This book was released on 2012-04 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial reporting quality has been under scrutiny especially after the collapse of major companies. The main objective of this study is to investigate the audit committee's effectiveness on the financial reporting quality among the Malaysian GLCs. In particular, the study examined the impact of audit committee characteristics (independence, size, frequency meeting and financial expertise) on earnings management in periods prior to and following the transformation program (2003-2009). The study is important as it provides additional knowledge about the impact of audit committee's effectiveness on reducing the earnings management, and assist practitioners, policymakers and regulators such as Malaysian Institute of Accountants, Securities Commission and government to determine ways to enhance audit committee's effectiveness and improve the financial reporting of GLCs, as well as improving the quality of the accounting profession.

Download or read book Audit Committees and Financial Reporting Quality written by Chaudhry Ghafran and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis examines the impact of audit committee characteristics on financial reporting quality in the context of a large sample of UK companies over the period 2007-2010. The notion of financial reporting quality is assessed by looking at the audit quality and earnings quality of the firms. This study utilises the audit fee and non-audit fee ratio as its proxies for audit quality and accruals based earnings management models as its proxies for earnings quality. The findings from the multivariate analysis show that audit committee meetings and financial expertise exert a significant positive impact on audit fees. Investigating expertise further, this study finds no support for the notion that accounting expertise influences audit fees, however a significant positive influence on audit fees is recorded for the non-accounting financial expertise. However, the holding of additional directorships has a significant negative impact on audit fees. This study also finds that audit committee members' financial expertise has a negative and significant impact on non-audit fee ratio suggesting a strong support of members with financial expertise on issues relating to auditor independence. The study also documents that audit committee members serving longer on the boards do not prefer to purchase high amount of non-audit services from the incumbent auditor. This study also records a significant positive impact of the holding of additional directorships on the provision of non-audit fee ratio, thus signifying a profound support for the busyness hypothesis which argues that overstretched directors are not very good monitors of financial reporting quality. Furthermore, this study finds broadly consistent evidence that audit committees meeting three or more times per year and fully independent audit committees exert a significant positive impact on the quality of reported earnings. This study also finds some evidence (depending on the earnings model used) that the level of ownership of audit committee members also exerts a positive impact on the quality of reported earnings, highlighting the fact that audit committee members with an equity stake in their companies are considered more effective in their oversight of the financial reporting process. On the other hand, this study finds evidence that the busyness of audit committee members (busyness defined in terms of the holding of board seats in other companies) has a significant negative impact on the quality of reported earnings. The composite variables (i.e. ACE1, ACE2, ACE3 and ACE4) representing those companies that satisfy all aspects of current best practice in terms of audit committee composition and operation, has a positive impact on the quality of reported earnings. This study covers the period 2007 to 2010 and therefore offers a contemporary analysis of the influence of audit committee characteristics on financial reporting quality. The study is very comprehensive in its scope not only in the selection of audit committee characteristics and methods employed to quantify these characteristics, but also in the use of various proxies developed to capture the true essence of financial reporting quality. The choice of multiple measurement methods both for the dependent and independent variables facilitates a much richer investigation into the relationship between governance and financial reporting quality variables. Therefore this study makes a major contribution to our understanding of the association between the various audit committee characteristics and financial reporting quality in the wake of recently introduced regulatory recommendations. These findings will also have policy implications as regulators around the world continue to define and refine the desired characteristics and behaviour of audit committees. Therefore, the findings of this study will ensure future policy changes regarding audit committees are adequately informed.

Download or read book Final Accounting written by Barbara Ley Toffler and published by Currency. This book was released on 2004-04-13 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: A withering exposé of the unethical practices that triggered the indictment and collapse of the legendary accounting firm. Arthur Andersen's conviction on obstruction of justice charges related to the Enron debacle spelled the abrupt end of the 88-year-old accounting firm. Until recently, the venerable firm had been regarded as the accounting profession's conscience. In Final Accounting, Barbara Ley Toffler, former Andersen partner-in-charge of Andersen's Ethics & Responsible Business Practices consulting services, reveals that the symptoms of Andersen's fatal disease were evident long before Enron. Drawing on her expertise as a social scientist and her experience as an Andersen insider, Toffler chronicles how a culture of arrogance and greed infected her company and led to enormous lapses in judgment among her peers. Final Accounting exposes the slow deterioration of values that led not only to Enron but also to the earlier financial scandals of other Andersen clients, including Sunbeam and Waste Management, and illustrates the practices that paved the way for the accounting fiascos at WorldCom and other major companies. Chronicling the inner workings of Andersen at the height of its success, Toffler reveals "the making of an Android," the peculiar process of employee indoctrination into the Andersen culture; how Androids—both accountants and consultants--lived the mantra "keep the client happy"; and how internal infighting and "billing your brains out" rather than quality work became the all-important goals. Toffler was in a position to know when something was wrong. In her earlier role as ethics consultant, she worked with over 60 major companies and was an internationally renowned expert at spotting and correcting ethical lapses. Toffler traces the roots of Andersen's ethical missteps, and shows the gradual decay of a once-proud culture. Uniquely qualified to discuss the personalities and principles behind one of the greatest shake-ups in United States history, Toffler delivers a chilling report with important ramifications for CEOs and individual investors alike.

Download or read book Audit Committee Effectiveness written by Catherine L. Bromilow and published by Iia Research Foundation. This book was released on 2005 with total page 180 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Audit Committee Handbook written by Louis Braiotta, Jr. and published by John Wiley & Sons. This book was released on 2010-02-22 with total page 415 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Audit Committee Handbook, Fifth Edition The Audit Committee Handbook, Fifth Edition guides you to: Understand the role and responsibilities of the audit committee with a general update and reality check on auditing cycle activities Identify the developments that impact audit committee practices and the most current techniques and strategies for committee meetings Develop a repertoire of effective strategies to help the board of directors discharge its fiduciary responsibility to shareholders Prepare a periodic assessment of professional development activities and an informed review of both audit processes and financial reporting processes A must-have for all audit committee members, board directors, corporate secretaries, CEOs, CFOs, and auditors involved in the accounting practices of their firms, The Audit Committee Handbook, Fifth Edition is the most authoritative work on audit committees in the marketplace.

Download or read book Audit Committee Essentials written by Curtis C. Verschoor and published by John Wiley & Sons. This book was released on 2008-04-30 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: Praise for Audit Committee Essentials "Audit Committee Essentials is an excellent and comprehensive resource, documented with key references and illustrated with real-life company examples for all types of commercial and nonprofit enterprises. Dr. Verschoor brings into focus the intertwined impact of risk management, internal controls, and ethics on oversight responsibilities for both the audit committee and the entire board of directors. From my personal perspective as an audit committee member and as a director of both profit and nonprofit entities, this book should be required reading for corporate management, boards of directors, and their committees." --George K. Gill, Chairman and CEO of PetAg, Inc.; Director and member of the Investment and Audit Committees of the United Methodist Foundation of Northern Illinois "Maintaining the highest ethical standards is critical to the success of not-for-profits in today's world. Dr. Verschoor's book provides a practical, highly prescriptive approach to ensuring that governance processes meet the highest expectations of managers, employees, volunteers, contributors, and other stakeholders. I am very impressed with the readability of the book. It definitely raises one's awareness of the need for a thought-out plan that ensures strong financial and ethical credibility." --John S. Maxson, President and CEO Greater North Michigan Avenue Association, Chicago, Illinois A concise and readable account of the audit committee's roles and responsibilities The Sarbanes-Oxley Act has changed the way all corporations now operate, regardless of size. In Audit Committee Essentials, goverance expert Curtis Verschoor explains with great detail and razor-sharp precision why internal control is so critical, emphasizing financial literacy, a requirement under Sarbanes-Oxley, as well as oversight of the financial reporting process and related controls, ethics and the internal and independent audits. Written for seasoned professionals as well as newly assigned board members, Audit Committee Essentials is a vital tool in order to stay abreast of the rapidly changing governance requirements and responsibilities of audit committees.

Download or read book The Relationship of the CEO Vs Internal Audit with Earnings Management written by Marcin Stryczek and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The present thesis examines the influence of an increased organisational power of the Chief Executive Officer (CEO) on the monitoring of the Internal Audit Function (IAF) and, in consequence, on the extent of earnings management. Lisic, Neal, Zhang, and Zhang (2016) find that when the CEO power is low, the financial expertise of the Audit Committee (AC) is negatively related to the incidence of internal control weaknesses. However, when the power of the CEO increases, this relation monotonically weakens until it becomes positive with sufficiently high level of the CEO power. It is believed that due to the specific role of the IAF in the corporate governance and its unique relationship with the AC, a powerful CEO might be able to exert a similarly moderating effect on the work of internal auditors. In order to test this hypothesis, three empirical models have been created to assess how the CEO power affects the relationship between the size of abnormal accruals according to the model proposed by Kothari, Leone, and Wasley (2005), and (1) the existence of a separate IAF, (2) the direct reporting lines of the function, and (3) potential full outsourcing of the function. Outcomes of the models suggest that the CEO power does not moderate the negative relation between the existence of a separate IAF and the extent of earnings management. Nevertheless, the CEO power appears to negatively moderate the connection between the reporting lines of the IAF to the AC or the Board of Directors (BoD) and the extent of earnings management. Finally, the CEO power does not appear to moderate the relationship between the decision to fully outsource the IAF to the external providers and the extent of earnings management.

Download or read book Audit Committee Financial Expertise Corporate Governance and Accruals Quality written by Dan S. Dhaliwal and published by . This book was released on 2006 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following the enactment of the Sarbanes Oxley Act 2002, US stock exchanges strongly advocate the presence of financial experts on audit committees. However, the ideal definition of financial expertise proves to be a controversial issue culminating with the stock exchanges adopting a wide scoped definition of financial expertise. Using this definition, prior studies have not provided consistent evidence of financial expertise positively influencing audit committee effectiveness. We investigate the association between three types of audit committee financial expertise (accounting, finance and supervisory expertise) and accruals quality. We find significant positive relation between accounting expertise and accruals quality, which is more pronounced in the presence of strong audit committee governance. The findings indicate that the current definition of financial expertise is too broad and any future refinements must focus on accounting expertise of the audit committee members.

Download or read book The Audit Committee Performing Corporate Governance written by Laura F. Spira and published by Springer Science & Business Media. This book was released on 2007-05-08 with total page 191 pages. Available in PDF, EPUB and Kindle. Book excerpt: Why do we need to understand audit committees? The Cadbury Committee recommended that UK companies should adopt them in response to financial scandals that have stemmed from dubious financial reporting practices. In other countries, similar commissions have made similar recommendations and audit committees are now a common institution. However, many practitioners doubt whether an audit committee really does much to ensure the integrity of a firm's financial statements because, as outsiders, members don't know enough to dig deeply beneath the numbers. The Audit Committee: Performing Corporate Governance argues that such criticism overlooks the ceremonial function of these committees. The audit committee is an arena where members can form and strengthen shifting and fragmentary networks with each other and with the external auditors. Within these networks, both consensus and independence are demonstrated, generating comfort, which legitimises the company and maintains its access to external sources of capital. The audit committee is a key part of the corporate governance structure within an organisation. Many in the UK have been patched together to meet regulatory requirements and their operation is poorly understood because few people other than their members have access to their deliberations. In this account of the world of audit committees the practitioner will find the ethnographical perspectives on ceremonial performance, consensus, independence, and comfort both familiar and different. It's like looking at a photograph of something commonplace from an unusual angle or through a strange-shaped lens.