Strengthening the Financial Reporting System: Can Audit Committees Deliver?

Bédard, Jean; Gendron, Yves

doi:10.1111/j.1099-1123.2009.00413.x

Cited by 330 publications

(387 citation statements)

References 145 publications

(279 reference statements)

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“…In a review of studies of the relationship between audit committee characteristics and audit committee effectiveness, Bédard & Gendron (2010) conclude that audit committee existence, members' independence and members' competence all influence effectiveness positively, whereas the number of meetings and the size of the committee have no significant impact. They lament the lack of research conducted outside the US, calling for research into the dynamics of audit committee processes.…”

Section: Audit Committee Processes Researchmentioning

confidence: 99%

Auditor–Client Interactions in the ChangedUKRegulatory Environment – A Revised Grounded Theory Model

2014

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Audit and financial reporting quality are under intense scrutiny nationally and globally. The outcome of high-level auditor-auditee discussion and negotiation issues (auditorclient interactions) is central to this debate. Beattie et al. (2001) developed a grounded theory model of these interactions in the 1997 UK setting. This paper reports on a field study of 45 interactions in nine case companies in the radically changed post-SOX regulatory environment. Crucially, interviewees in each case company extend the chief financial officer -audit partner dyad to include the audit committee chair. Fundamental revisions to the model emerge. The strongest influence on interactions has become the national enforcement regime, overlaid upon the international standard-setting regime. The outcome in both the eyes of the participants and in our evaluation is full compliance (contrary to the findings from the 1997 setting), regardless of the perceived quality of the standards and the integrity of the outcome. Personal and company characteristics, which were of most importance in 1997, have become peripheral. The audit committee chair is shown to fulfil a gatekeeping role in relation to the full audit committee.

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Section: Audit Committee Processes Researchmentioning

confidence: 99%

Auditor–Client Interactions in the ChangedUKRegulatory Environment – A Revised Grounded Theory Model

2014

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“…In Bahrain, the Bahrain CGC stated that, a majority of the AC should have the financial literacy qualifications. Financial expertise leads AC members to identify and ask knowledgeable questions that challenge management and external audit to a greater extent of financial reporting quality (Bédard and Gendron, 2010). It is generally agreed that the key duty of the AC is to review the financial reporting process to ensure the best quality of financial reports, thus the availability of an accounting and financial expertise in the AC would enhance its efficiency and its ability in detecting and preventing earnings management.…”

Section: Audit Committee Expertisementioning

confidence: 99%

“…Literature on AC has suggested that AC effectiveness essentially functions on AC characteristics (e. g. Persons, 2009;Bédard and Gendron, 2010;Dhaliwal et al, 2010;Li et al, 2012). Therefore, the perfect AC size with the right combination of skills and experience are critical in supporting the AC's ability in detecting and preventing earnings management.…”

Section: Literature Reviewmentioning

confidence: 99%

“…AC is considered as one of the crucial and influential participants of corporate governance as it assists the board of directors in discharging its responsibilities in overseeing corporate management (Bédard and Gendron, 2010;Li et al, 2012). An AC is a sub-committee of the board that specializes in, and is responsible for, ensuring the accuracy and reliability of the financial statements provided by management.…”

Section: Introductionmentioning

confidence: 99%

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Audit Committee Characteristics and Earnings Management: The Case of Bahrain

Juhmani

2017

ijafr

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This study examines the effectiveness of some audit committee (AC) characteristics to monitor management behavior with the respect to their incentives to manage earnings. Bahraini listed companies on Bahrain Bursa for the year 2012 to 2014 have been investigated to analyze the relationship between AC characteristics and earnings management. The AC characteristics examined are AC independence, AC size, AC meetings and AC financial experts. Multivariate regression model is used to examine the relationship between earnings management as dependent variable and AC characteristics as independent variables and other firm-specific attributes, as control variables. As a small developing market, Bahrain's unique business environment and context offer a good opportunity and provides a useful setting for examining the effectiveness of AC characteristics in detecting and preventing earnings management practices. The results show that discretionary accruals as a proxy for earnings management is negatively associated with AC size and AC financial experts, but positively associated audit firm size as control variable. However, the results do not show a significant relationship between AC independence, AC meetings, company size, leverage and earnings management. This study extends the literature on the monitoring function of the AC on earnings management, and contributes geographically to the financial reporting process and earnings management literatures by analyzing data from an emerging market and providing useful information for the corporations, accounting profession and the regulators on the effective practice of ACs.

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“…The composition and size of boards of directors have been broadly investigated by scholars for their impact on enhancing the effectiveness of the boards' monitoring role and in mitigating the agency problem (Bedard, Chtourou & Courteau 2004;Bédard & Gendron 2010;Cheng & Warfield 2005;Cohen, J, Krishnamoorthy & Wright 2008;Davidson, Goodwin-Stewart & Kent 2005;Finnerty 1976;Jaffe 1974;Jensen 1993;Klein 2002b;Merchant & Rockness 1994;Xie, Davidson & DaDalt 2003). A board's effectiveness is also described as its ability to prevent managers from making decisions that conflict with stakeholder interests (Jo & Kim 2007).…”

Section: Board Structure (Principle 2) and Earnings Managementmentioning

confidence: 99%

Compliance with Corporate Governance Principles: Australian Evidence

Safari¹,

Mirshekary²,

Wise³

2015

AABFJ

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This study investigates the association between the level of compliance of Australian listed companies with Australian corporate governance principles, in aggregate, and the level of discretionary accruals using the modified Jones model. It is hypothesised that higher levels of compliance would be associated with lower levels of discretionary accruals. Data from a random sample of 214 Australian listed companies for the years 2009 and 2010 were used to test the hypothesis. The results demonstrate a significant negative relationship indicating that companies with higher levels of compliance engage in lower levels of earnings management via discretionary accruals. AbstractThis study investigates the association between the level of compliance of Australian listed companies with Australian corporate governance principles, in aggregate, and the level of discretionary accruals using the modified Jones model. It is hypothesised that higher levels of compliance would be associated with lower levels of discretionary accruals. Data from a random sample of 214 Australian listed companies for the years 2009 and 2010 were used to test the hypothesis. The results demonstrate a significant negative relationship indicating that companies with higher levels of compliance engage in lower levels of earnings management via discretionary accruals. JEL Classification: M40

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Strengthening the Financial Reporting System: Can Audit Committees Deliver?

Cited by 330 publications

References 145 publications

Auditor–Client Interactions in the ChangedUKRegulatory Environment – A Revised Grounded Theory Model

Auditor–Client Interactions in the ChangedUKRegulatory Environment – A Revised Grounded Theory Model

Audit Committee Characteristics and Earnings Management: The Case of Bahrain

Compliance with Corporate Governance Principles: Australian Evidence

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