The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees

Dhaliwal, Dan S.; Naiker, Vic; Navissi, Farshid

doi:10.2139/ssrn.1548766

Cited by 215 publications

(440 citation statements)

References 76 publications

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“…The coefficient β 6 is positive and significant, indicating that a higher number of support specialists is associated with higher conservatism. These results are in line with previous literature (Xie et al 2003;Dhaliwal et al 2010;Badolato et al 2014) showing that the skills and specific abilities of directors are related to lower earnings management and better internal control. Nevertheless, we confirm limited support of the influence of business experts.…”

Section: Resultssupporting

confidence: 93%

“…These papers note that performance improved when directors possessed specific expertise in particular functions (Xie et al 2003). Regarding accounting quality, Carcello et al (2006) show that financial expertise decreases earnings management for firms with weak alternative corporate governance mechanisms, while Krishnan (2005), Dhaliwal et al (2010) and Badolato et al (2014) find that financial expertise is related to lower earnings management and better internal control. Evidence also exists that directors with legal expertise bring benefits to their firms (Krishnan and Visvanathan 2008) and that lawyer directors reduce corporate risk-taking and increase firm value (Litov et al 2014).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Some research analyses the effects of skills and the specific abilities of directors and examines the presence of financial and accounting experts on boards and audit committees, finding that financial expertise is related to lower earnings management and better internal control (Xie et al 2003;Dhaliwal et al 2010;Badolato et al 2014). Previous studies report that the presence of financial experts on the audit committee leads to fewer restatements of earnings (Abbott et al 2004) and positive stock market reaction when they are appointed (Defond et al 2005).…”

Section: Background and Hypotheses Developmentmentioning

confidence: 99%

“…In this regard, recent studies suggest that directors' backgrounds are arguably more important than either the absolute or relative number of outsiders on the board, thereby making it necessary to go beyond the distinction of a director being independent or not independent to analyse his or her effects on accounting quality. 1 Therefore, although much research has focused on the role of directors as monitors, recent theoriessuch as resource-based and resource dependencehighlight the value of the board advisory function and show, for instance, that director advice is relevant when the firm is complex or when they can provide financial expertise, contacts and political influence (Dhaliwal et al 2010;Dass et al 2014). Studies also find that not all outside directors are equally effective monitors or valuable advisors and that outside directors have different problem-solving skills, professional experiences and business exposure, reflecting variability in their abilities (Baysinger and Zardkoohi 1986).…”

mentioning

confidence: 99%

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Board Composition and Accounting Conservatism: The Role of Business Experts, Support Specialist and Community Influentials

Enache

García‐Meca

2018

Australian Accounting Review

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In this study, we examine the relationship between accounting conservatism and board composition. We categorise outside directors according to their skills, abilities, connections and knowledge in three different categories: business experts, support specialists and community influentials. We address three main questions: Is the financial and accounting expertise of directors relevant to improving accounting conservatism? Does specialised expertise in the board affect the speed at which news is reflected in earnings? And how do the political ties of directors affect the sensitivity of earnings to bad news? Our sample consists of active US biotech firms publicly traded on the NYSE, AMEX and NASDAQ stock exchanges during the 2005–2013 period. Our study confirms that not all outside directors are equally effective in monitoring and contracting and that certain kinds of outside directors, such as politicians, can even lower the sensitivity of earnings to bad news. Our robustness analysis confirms that these results are not conditional on the accounting measure, and suggest that distinguishing directors according to their skills and abilities is crucial to understanding the way in which firm boards affect conservatism.

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Section: Resultssupporting

confidence: 93%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Background and Hypotheses Developmentmentioning

confidence: 99%

mentioning

confidence: 99%

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Board Composition and Accounting Conservatism: The Role of Business Experts, Support Specialist and Community Influentials

Enache

García‐Meca

2018

Australian Accounting Review

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“…Lastly, to measure the quality of the audit committee we hand-collect data from annual proxy statements on accounting expertise, meeting frequency, and size of the audit committee in the year of the Big 4 appointment. We follow Dhaliwal et al (2010) to define accounting expertise of the audit committee (see Appendix for all variable definitions).…”

Section: Sample Selection and Datamentioning

confidence: 99%

Management Influence on Auditor Selection and Subsequent Impairments of Auditor Independence during the Post‐SOX Period

Dhaliwal

Lamoreaux

Lennox

et al. 2014

Contemporary Accting Res

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Corporate social and environmental disclosure as a sustainable development tool provided by board sub‐committees: Do women directors play a relevant moderating role?

2021

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The aim of this research is to examine the impact of three audit committee characteristics on corporate social and environmental responsibility (CSR) disclosure: the existence of an audit committee, audit committee independence, and audit committee financial expertise. Moreover, this research analyzes the moderating effect of board gender diversity between these audit committees' attributes and CSR reporting. The results of analyzing 13,178 firm-year observations of non-financial companies show that the presence of an audit committee and audit committee financial expertise are positively associated with CSR disclosure. However, a higher proportion of non-executive directors in audit committees has a negative effect on the disclosure of CSR information. These findings suggest that some audit committees' features play an important role in ensuring the reporting of environmental, social, and economic information. Our evidence also indicates that the presence of female directors on boards increases the positive impact of financial expert membership of audit committees on CSR disclosure, while women directors moderate any negative effect of the percentage of independent directors on audit committees on CSR reporting by increasing the latter. In addition, female directors moderate the positive impact of the existence of an audit committee on the disclosure of CSR information by reducing the latter.

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The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees

Cited by 215 publications

References 76 publications

Board Composition and Accounting Conservatism: The Role of Business Experts, Support Specialist and Community Influentials

Board Composition and Accounting Conservatism: The Role of Business Experts, Support Specialist and Community Influentials

Management Influence on Auditor Selection and Subsequent Impairments of Auditor Independence during the Post‐SOX Period

Corporate social and environmental disclosure as a sustainable development tool provided by board sub‐committees: Do women directors play a relevant moderating role?

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