The Impact of Audit Quality, Audit Committee and Financial Reporting Quality: Evidence From Malaysia

Hasan, Shahanif; Kassim, Aza Azlina Md; Hamid, Mohamad Ali Abdul

doi:10.32479/ijefi.10136

Cited by 41 publications

(74 citation statements)

References 36 publications

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“…Our findings are consistent with literature as most studies reported positive significant association between ACMEET and FRQ measured in various proxies (Habbash & Alagla, 2015;Hamdan, 2020;Hasan et al, 2019;Hasan et al, 2020;Lin et al, 2006;Mwangi, 2018;Shankaraiah & Amiri, 2017). Our results confirmed the findings of previous studies as more AC meetings is positively affected FRQ.…”

Section: Multivariate Analysis (Regression Analysis and Hypotheses Testingsupporting

confidence: 93%

Audit Committee Attributes, Audit Quality, and Financial Reporting Quality: Evidence from the GCC Stock Markets

Ali¹

2021

مجلة البحوث المالیة والتجاریة

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The main objective of this study is to empirically investigate whether the audit committee (AC) attributes and the quality of external auditor are associated with financial reporting quality (FRQ) of companies listed on the gulf cooperation council (GCC) countries' stock markets. To achieve the study's objectives, data was collected from a sample of 115 companies from four GCC countries during the period from 2017-2019 that represents 345 firm-year observations. Five hypotheses were tested, FRQ as dependent variable was regressed with five independent variables. For measuring the FRQ, the author adopted the qualitative approach using checklist developed by Beest, et al. 2009 sponsored by Nijmegen Center for Economics (NiCE) with limited modification based on the new amendments of IASB conceptual framework in 2018. The study findings reveal that the level of FRQ on the study sample averaged 63% while the minimum and the maximum valued 40% and 86% respectively. The findings indicate that FRQ are positively and significantly associated with the four AC attributes and quality of external auditor so, all hypotheses are accepted, which infer that FRQ will be enhanced if a company formed AC having, bigger size, more independence, financial experience, meetings frequently, and hiring high quality external auditor.The findings of this study have wide implications to all stakeholders especially, investors, creditors, auditors, management, in addition to stock markets regulators and standard-sitting bodies for the role of AC attributes and external auditor on improving FRQ.

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Section: Multivariate Analysis (Regression Analysis and Hypotheses Testingsupporting

confidence: 93%

Audit Committee Attributes, Audit Quality, and Financial Reporting Quality: Evidence from the GCC Stock Markets

Ali¹

2021

مجلة البحوث المالیة والتجاریة

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“…H5: There is a significant positive relationship between audit committee independence and FRQ (Hasan et al, 2020).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…This characteristic of the audit committee has received considerable attention in the previous literature that indicates a positive relationship between audit committee financial, accounting expertise, and FRQ (Alzeban 2019;Hassan 2011;Nuraini 2015). In contrast, some studies have found an insignificant relationship which argues that having a financial expert in the audit committee is not enough component for improving the quality of financial information (Hasan et al, 2020;Kibiya et al, 2016). According to Shankaraiah et al (2017), some accounting experts in the audit committee assess the subjective judgments of the management, meet more frequently, and more often disagree with the financial reporting decisions of the management, and finally result in inadequate monitoring over the reporting process.…”

Section: Empirical Evidence Between Corporate Governance and Frqmentioning

confidence: 99%

“…The presence of an audit committee with a majority of independent directors ensures a strong controlling mechanism by reducing the agency cost, improving the internal controls, and thereby paving the way to highquality disclosures. The extant literature provides evidence that firms with a higher proportion of independent directors report lower discretionary accruals, thus enhancing overall FRQ (Hasan, Kassim & Hamid, 2020;Kibiya, Che-Ahmad & Amran, 2016). However, Majiyebo et al (2018) and Shah et al (2019) in their studies, have documented that role of the independent audit committee is rather limited in controlling and monitoring the management behavior over reducing earnings manipulation and therefore present an adverse association between audit committee independence and FRQ.…”

Section: Empirical Evidence Between Corporate Governance and Frqmentioning

confidence: 99%

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Does Corporate Governance Affect Financial Reporting Quality? Evidence from Listed Entities in Sri Lanka

Hewage

Amarasekara

2022

S. Asian J. Bus. Insights

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The purpose of this paper is to investigate the relationship between selected CG characteristics and the level of FRQ in Sri Lanka. The study was carried out using secondary data obtained through published annual reports from 209 companies listed in the Colombo Stock Exchange (CSE) from 2017 to 2020 including 836 firm-year observations. Six selected CG characteristics (Board Size, Board Independence, CEO Duality, Audit Committee Size, Audit Committee Independence, and Audit Committee Accounting Expertise) and the level of FRQ has been evaluated by the absolute value of discretionary accruals (ADA) using Panel linear regression analysis. It was found that a significant positive relationship between the audit committee accounting expertise and FRQ, while a significant negative relationship was found between Board Size and FRQ. However, the other remaining CG characteristics did not significantly influence the level of FRQ. Overall, this analysis highlights the importance of having a comparatively smaller board size and composition of the members in the audit committee with financial and accounting backgrounds to enhance FRQ and transparency. The findings of this study expect to have a significant policy implication for policymakers and regulators in terms of formulating strategies and policies on CG best practices in Sri Lanka. Similarly, the entities should promote smaller board size and recruiting, especially the majority of independent nonexecutive directors with sufficient accounting skills and financial experience to curtail the adverse earnings management practices to improve FRQ.

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“…The primary role of an auditor is to clarify professionally and reasonably whether financial statements prepared by the companies provide objective and reliable information. Audit quality increases financial reporting quality by improving investors' confidence (Hasan et al, 2020). In addition, audit quality may mitigate problems appearing from information asymmetry (Dobler, 2008).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Creative accounting and its influence on corporate performance and financial reporting: A case study of Kosovo

Abdurrahmani

Doğan

2021

Problems and Perspectives in Management

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As it is known, Kosovo is a newly established and developing country. Naturally, creative accounting practices in Kosovo are becoming more frequent due to gaps and weaknesses in management and audit quality. This study aims to examine the relationship between creative accounting and corporate performance and management, as well as the impact of managers’ ethics including audit period on financial reporting and creative accounting limitation. The study adopted a survey-based approach. The questionnaires were distributed among 159 managers, auditors, and head accountants. Linear regression was used to analyze the hypotheses. The research results confirmed the rejection of the first hypothesis, as the mean is less than 3 (the average on a five-point Likert scale). The results confirmed that creative accounting has a significant impact on corporate performance. The results also confirmed the second hypothesis as the mean is greater than 3.5 (the average on a five-point Likert scale). Thus, managers’ ethics have a significant effect on the reliability of financial statements. In addition, the research results confirmed the acceptance of the third hypothesis, as the mean is greater than 3 (the average on a five-point Likert scale), thus there is a positive influence of the audit period on creative accounting limitation. The study found a negative impact of creative accounting on corporate performance. Furthermore, a significant effect of managers’ ethics on financial statements’ reliability was concluded; and finally, the findings concluded that audit period and quality could significantly contribute to the creative accounting limitation.

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The Impact of Audit Quality, Audit Committee and Financial Reporting Quality: Evidence From Malaysia

Cited by 41 publications

References 36 publications

Audit Committee Attributes, Audit Quality, and Financial Reporting Quality: Evidence from the GCC Stock Markets

Audit Committee Attributes, Audit Quality, and Financial Reporting Quality: Evidence from the GCC Stock Markets

Does Corporate Governance Affect Financial Reporting Quality? Evidence from Listed Entities in Sri Lanka

Creative accounting and its influence on corporate performance and financial reporting: A case study of Kosovo

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