Audit Committee Financial Expertise, Corporate Governance and Accruals Quality: An Empirical Analysis

Impact of Audit Committee and Audit Quality on Preventing Earnings Management in the Pre- and Post- Nigerian Corporate Governance Code 2011

“…Akhigbe and Martin (2006) find a favorable valuation effect of the audit committee members with financial expertise in the pre-SOX financial services industry. Dhaliwal et al (2007) investigate three types of financial experts (accounting, finance, and supervisory) in the audit committee and find a positive relation between accruals quality and accounting experts. However, they do not find a significance relation between accruals quality and non-accounting experts.…”

Audit committee characteristics and investment in internal auditing

“…Zhang et al (2007), Hoitash et al (2009), and find that the presence of accounting experts on the audit committee is associated with a lower likelihood of internal control problems. Accounting experts have also been associated with higher quality financial reporting (e.g., Dhaliwal et al, forthcoming;Bedard et al, 2004;Krishnan and Visvanathan, 2008;Naiker and Sharma, 2009). In addition, Raghunandan and Rama (2007) show that there is a significant positive association between the proportion of accounting experts and the number of audit committee meetings, but that there is no such association for non-accounting financial experts.…”

“…One argument is that there may be a trade-off in that the presence of an auditing expert may provide more effective internal monitoring. For example, prior research suggests that audit committee members with specific accounting expertise (e.g., Dhaliwal et al, forthcoming;Krishnan and Visvanathan, 2008;Naiker and Sharma, 2009) and auditing experience ) are positively associated with internal control effectiveness and the quality of financial reporting. Hence, the presence of accounting and/or auditing experts may reduce the need for other types of assurance to the audit committee.…”

Corporate Governance and Accountability

“…Further research has shown a greater benefit from accounting expertise than from either independence or general financial expertise (Abbott, Parker, and Peters 2004;Dhaliwal, Naiker, and Navissi 2006). Thus, directors with experience preparing or auditing financial statements seem to contribute most significantly to constraining earnings management and other forms of financial fraud (Cunningham 2008b).…”