Audit committee and audit quality: An empirical analysis considering industry expertise, legal expertise and gender diversity

Alhababsah, Salem; Yekini, Liafisu Sina

doi:10.1016/j.intaccaudtax.2021.100377

Cited by 47 publications

(38 citation statements)

References 89 publications

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“…A number of archival studies from Jordan (Alhababsah and Yekini, 2021;Alzoubi, 2019) and other MENA countries (Bin-Ghanem and Ariff, 2016;Jizi and Nehme, 2018;Khlif and Samaha, 2016;Nasr and Ntim, 2018) showed that complying with a corporate governance code has a positive impact on the AC's monitoring role. The findings of these studies are consistent with the agency theory proposition in terms of the ability of ACs to exert effective monitoring on financial reporting and executive management.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Moreover, investors in Jordan do not normally issue complaints against auditors, so lawsuits against them are uncommon (Alhababsah and Yekini, 2021). In such a context where the litigation risk is low, external auditors have weak incentives to achieve high audit quality (Francis, 2006) and are more likely to behave opportunistically themselves to retain and attract clients.…”

Section: Jordanian Background: An Overviewmentioning

confidence: 99%

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Audit committees’ oversight role in developing countries: evidence from Jordan

Alhababsah

2022

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Purpose This study aims to explore the opinions of audit committee (AC) members on the extent to which they fulfil the oversight role vested in them by the Jordanian Corporate Governance Code (JCGC). Design/methodology/approach This study uses semi-structured interviews with 18 AC members. Findings The findings suggest that although ACs largely meet the JCGC’s recommendations, their substantive oversight role in practice is limited. In particular, the responses indicate that ACs suffer from a lack of real power, especially concerning the appointment (or removal) of external auditors and the evaluation of internal control. Moreover, ACs have no actual role in issues deemed important for financial reporting quality (e.g. reviewing management estimates and evaluating chief financial officer (CFOs) and internal audit executives). Originality/value This study provides rich insights into ACs’ oversight processes in a setting outside the Anglo-Saxon corporate governance model where knowledge is scant on the ACs’ real function. Hence, the study injects the literature with new qualitative-based evidence from a peculiar civil law country. Also, Jordan has spent time and energy trying to strengthen corporate governance practices to boost investors’ confidence. However, the interviewees’ responses indicate that the oversight role of the AC is still far from what the regulators anticipate. Therefore, the findings offer useful feedback for regulators to think more deeply about the current governance regulations. The feedback from this study can be extended to other developing countries with similar institutional environments, especially countries in the Middle East and North Africa.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Jordanian Background: An Overviewmentioning

confidence: 99%

Audit committees’ oversight role in developing countries: evidence from Jordan

Alhababsah

2022

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“…Bédard and Gendron (2010) find the audit committee chair responsible for developing appropriate relationships with auditors and management and nurturing a positive working relationship among committee members. Lee and Stone (2003) find that audit committee chair expertise is associated with audit committees with greater expertise and experience whereas Alhababsah and Yekini (2021) find audit committee chair legal expertise has no impact on audit quality. Martinov-Bennie, Soh and Tweedie ( 2015) provide insight into the changing role of audit committees and chairs beyond just meeting regulatory requirements.…”

Section: Audit Committee and Audit Committee Chair Literaturementioning

confidence: 98%

Audit Committee Chair Characteristics, and Auditor Dismissal in a Going Concern Context

Sawani

2021

ijafr

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This study examines the role audit committee chair expertise may play in fostering audit quality. The 2002 Sarbanes-Oxley Act (SOX) was enacted to strengthen corporate governance practices in the United States; a fundamental part of this act addressed the audit committee structure and composition. Existing literature suggests that audit committee expertise may improve audit quality. In this study I use a logistic model to compare audit committee chair expertise characteristics for first-time going concern opinion firms that dismissed and did not dismiss the auditor after receiving the going concern opinion for the years [2008][2009][2010][2011][2012][2013][2014][2015][2016] with that of firms that received clean opinions and dismissed or did not dismiss the auditor. I find that audit committee chairs with financial expertise, audit expertise, governance expertise and industry expertise are negatively associated with auditor dismissal. This suggests that firms with these audit committee chair expertise profiles may facilitate better audit quality. Moreover, the chair's audit expertise, industry expertise and financial expertise are differentially significant in the going concern context indicating that these expertise types may temper management's inclination to dismiss auditors after undesirable opinions.

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“…Moreover, the assumed benefit of categorizing financial expertise draws from the expectation that accounting financial expertise could play more effective monitoring role than non-accounting financial experts on audit committees (Al-Musali et al, 2019;Alhababsah & Yekini, 2021). With increasing issues related to auditing and accounting, it is further argued that the accounting expertise of audit committee members significantly influences the audit committee's effectiveness (Sellami & Fendri 2017).…”

Section: Audit Committee Financial Expertisementioning

confidence: 99%

Do Level of Audit Committee Independence and Types of Financial Expertise Affect Corporate Voluntary Disclosure: Evidence for an Emerging Economy

Madi

2022

EJBMR

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The aim of this study is report on the level of audit committee (AC) independence and different types of financial expertise and to empirically examine the effect of AC independence level and different types of AC financial expertise on corporate voluntary disclosure of Malaysian listed firms. Using multiple regression analysis on data drawn from annual reports of top 146 listed firms, the findings reveal that proportion of independent directors on audit committee, and totally independent audit committee members can lead to significantly a higher level of voluntary disclosure. Further, members with accounting expertise of AC are significantly associated with corporate voluntary disclosure. The findings of this study may be of interest to policy makers, regulators, shareholders and management as they could use them to understand and assess AC effectiveness and hence enhance the monitoring role of AC.

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Audit committee and audit quality: An empirical analysis considering industry expertise, legal expertise and gender diversity

Cited by 47 publications

References 89 publications

Audit committees’ oversight role in developing countries: evidence from Jordan

Audit committees’ oversight role in developing countries: evidence from Jordan

Audit Committee Chair Characteristics, and Auditor Dismissal in a Going Concern Context

Do Level of Audit Committee Independence and Types of Financial Expertise Affect Corporate Voluntary Disclosure: Evidence for an Emerging Economy

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