The Impact of Board Composition and Ownership on Audit Quality: Evidence From Large Uk Companies

O’Sullivan, Noel

doi:10.1006/bare.2000.0139

Cited by 239 publications

(203 citation statements)

References 35 publications

(56 reference statements)

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“…According to Boone, Khurana, & Raman (2010), information asymmetries could be reduced by having quality financial report since it provides quality information as it maps the earnings well. On the other hand, rather than only focusing the effects of audit quality on trustworthiness of financial reporting, many prior studies chose to focus on factors of audit quality (O'Sullivan, 2000;Kane & Velury, 2005;Al-Ajmi, 2009;Makni, Kolsi, & Affes, 2012). Generally, the public assumes that companies will choose the best auditors to obtain good audit quality.…”

Section: Audit Qualitymentioning

confidence: 99%

“…They mentioned that higher audit fees charged indicates that auditors provide more efficient audit services to clients compared to lower audit fees. According to O'Sullivan (2000), thorough investigation requiring audit specialization and hours will lead to higher audit fees. Thus, it is expected that higher audit fees indicate higher audit quality since more audit work is required to ensure financial statements are free from material misstatements (Yasin & Nelson, 2012).…”

Section: Measurement Of Audit Qualitymentioning

confidence: 99%

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Conceptual Relationship between Corporate Governance and Audit Quality in Shari’ah Compliant Companies Listed on Bursa Malaysia

Kasim¹,

Hashim²,

Salman³

2016

MAS

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The issue of corporate governance has been a focus among researchers after the 1997/98 financial crisis. Many countries have implemented codes and guidelines of corporate governance to promote effective boards overseeing the operations of companies. In the case of Shari'ah compliant companies, boards still play a significant role and are responsible to ensure Shari'ah compliance. This paper reemphasises the conceptual relation between corporate governance mechanisms and audit quality. The corporate governance mechanisms are measured by board size, CEO duality, independent directors, financial experts on the audit committee, and the existence of an internal Shari'ah committee. There are numerous methods to measure audit quality including using audit fee and auditor reputation as proxies. The findings are mixed. This means that there is no consistent relationship between good corporate governance mechanisms and audit quality.

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Section: Audit Qualitymentioning

confidence: 99%

Section: Measurement Of Audit Qualitymentioning

confidence: 99%

Conceptual Relationship between Corporate Governance and Audit Quality in Shari’ah Compliant Companies Listed on Bursa Malaysia

Kasim¹,

Hashim²,

Salman³

2016

MAS

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“…The Blue Ribbon Committee also recommends that only independent directors should serve on the audit committees, a recommendation that was adopted in Kenya by the CMA in 2002 (Hussein, 2003).Non-executive directors are cornerstone of modern corporate governance. The proportion of non-executive directors had a significant positive impact on audit quality (O'Sullivan, 2000;Salleh et al, 2006). It was further suggested that non-executive directors encouraged more intensive audits as a complement to their own monitoring role while the reduction in agency costs expected through significant managerial ownership resulted in a reduced need for intensive auditing.…”

Section: Members Of Audit Committee and Audit Qualitymentioning

confidence: 99%

Board Leadership Structure, Audit Committee and Audit Quality: Evidence from Manufacturing Companies in Sri Lanka

Velnampy¹,

Nadarajah²,

Tharanika³

et al. 2014

IJBM

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Purpose: This paper aims to analyze whether the corporate governance attributes such as board leadership structure, audit committee meetings held, size of independent non-executive directors and size of non-executive directors have significant impact on audit quality of manufacturing companies listed on Colombo Stock Exchange, Sri Lanka during 2011 to 2013. Research Design:The study takes 32 manufacturing companies listed in Sri Lanka out of 36 as sample and employs binary logistic regression method for modeling the association between a binary dependent variable such as audit quality and multiple independent variables such as board leadership structure, audit committee meetings held, size of independent non-executive directors, and size of non-executive directors. Findings:The study finds the logistic regression model for overall evaluation, statistical tests of individual predictors and goodness-of-fit. As per the output, Hosmer and Lemeshow test reveals the model for goodness of fit with chi-square of 17.503 and with probability value of 0.008, which is significant at five percent levels. Cox & Snell R Square reveal 56.2 % of the variance in audit quality. Whereas board leadership structure and audit committee meetings held have significant relationship with audit quality, size of non-executive directors and size of independent non-executive directors have shown insignificant association.Research Limitation-As sample size is relatively small, there may be a challenge to generalize the results of this study widely.Originality-This research contributes to the literature by adding the significant association between some corporate governance variables and audit quality. The findings from this research could be generalized to the companies similar to this category.

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“…The degree to which information asymmetries are reduced by financial reports is crucially dependent on the quality of these financial reports; the purpose of an audit is to improve financial reporting quality (Boone et al, 2010). However, in addition to the direct effects of audit quality on accounting trustworthiness, indirect effects of audit quality are also observed; these effects are mediated by the associations between audit quality and other mechanisms of corporate governance (O'Sullivan, 2000;Carcello et al, 2002;Abbott et al, 2003;Knechel and Willekens, 2006).…”

Section: The Importance Of Audit Qualitymentioning

confidence: 99%

Audit Quality and Corporate Governance: Evidence from the Microfinance Industry

2012

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This study uses a unique, hand-collected sample of microfinance institutions from 73 countries that typically are not investigated in accounting research to analyze the relationships between audit quality and governance mechanisms. We examine two measures of audit quality, namely, the use of Big Four auditors and the presence of internal auditors who report to the boards of these institutions. The empirical analysis of this study reveals that these two quality metrics are highly related, although we also demonstrate that these metrics capture distinctive aspects of audit quality. In particular, the presence of internal auditors is related to other indicators of stricter governance, whereas the use of Big Four auditors is generally unrelated to other control mechanisms. This study illustrates that there is no single association between audit quality and governance; instead, the relationships between these two characteristics are dependent on the specific mechanism that is investigated. However, for situations in which a significant relationship between audit quality and governance does exist, the sign of this relationship is always positive. Thus, our data support the complementarity view of these two traits that is espoused by prior research. We find no support for the contention that these control mechanisms function as substitutes. CEB AbstractThis study uses a unique, hand-collected sample of microfinance institutions from 73 countries that typically are not investigated in accounting research to analyze the relationships between audit quality and governance mechanisms. We examine two measures of audit quality, namely, the use of Big Four auditors and the presence of internal auditors who report to the boards of these institutions. The empirical analysis of this study reveals that these two quality metrics are highly related, although we also demonstrate that these metrics capture distinctive aspects of audit quality. In particular, the presence of internal auditors is related to other indicators of stricter governance, whereas the use of Big Four auditors is generally unrelated to other control mechanisms. This study illustrates that there is no single association between audit quality and governance; instead, the relationships between these two characteristics are dependent on the specific mechanism that is investigated. However, for situations in which a significant relationship between audit quality and governance does exist, the sign of this relationship is always positive. Thus, our data support the complementarity view of these two traits that is espoused by prior research. We find no support for the contention that these control mechanisms function as substitutes.2

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The Impact of Board Composition and Ownership on Audit Quality: Evidence From Large Uk Companies

Cited by 239 publications

References 35 publications

Conceptual Relationship between Corporate Governance and Audit Quality in Shari’ah Compliant Companies Listed on Bursa Malaysia

Conceptual Relationship between Corporate Governance and Audit Quality in Shari’ah Compliant Companies Listed on Bursa Malaysia

Board Leadership Structure, Audit Committee and Audit Quality: Evidence from Manufacturing Companies in Sri Lanka

Audit Quality and Corporate Governance: Evidence from the Microfinance Industry

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