The Influence of Audit Committee Characteristics on Modified Audit Opinion in Jordan

Alkilani, Saleh Zaid

doi:10.11648/j.jfa.20190703.14

Cited by 11 publications

(15 citation statements)

References 60 publications

(179 reference statements)

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“…Regarding the relation between AC characteristics and auditing measures, Kikhia (2014) found that AC independence was positively associated with audit fee levels, though he found no statistically significant association between audit fee levels and AC meetings nor AC member expertise. Finally, Alkilani et al. (2019) found that AC member expertise is likely to lead to less modified audit opinions, unlike AC size, AC independence or AC number of meetings, where that relation was not found.…”

Section: Background Of the Studymentioning

confidence: 93%

The role of audit committees in mitigating earnings management: evidence from Jordan

Almarayeh

Abdullatif

Guzmán

2022

JAEE

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PurposeThis study examines the relationship between audit committees (ACs) and earnings management (EM) in the developing country context of Jordan. In particular, it investigates whether audit committee attributes, including their size, independence, expertise and meetings, are able to restrict discretionary accruals as a proxy for EM.Design/methodology/approachThe generalized least square (GLS) regression was used to study the association between audit committee attributes and discretionary accruals, as a proxy of EM, for a sample of industrial firms listed on the Amman Stock Exchange (ASE) during the period 2012–2020. Data were obtained from the firms' annual reports.FindingsThe regression results indicate that audit committee independence is the only audit committee attribute that seems to improve the effectiveness of ACs, in that it is significantly associated with less EM, while other audit committee attributes that were tested do not show statistically significant associations.Research limitations/implicationsIn emerging markets, like Jordan, ACs may not be an efficient monitoring mechanism; therefore, it can be argued that the prediction made by the agency theory about the role of ACs in mitigating opportunistic EM activities does not necessarily apply to all contexts.Practical implicationsA better understanding of audit committee effectiveness in developing countries could help regulators in these countries assess the impact of planned corporate governance (CG) reforms and to better monitor and enhance the performance of ACs.Social implicationsIn a setting characterized by closely held companies, high power distance and low demand for high-quality CG mechanisms, this study contributes to understanding how this business system operates, and how improving CG mechanisms could be successful in such cultures.Originality/valueThis study investigates the under-researched relationship between audit committee characteristics and EM in developing countries. In so doing, it aims to provide new insights into this relationship within the developing context case of Jordan, including if and how the institutional setting influences this relationship.

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Section: Background Of the Studymentioning

confidence: 93%

The role of audit committees in mitigating earnings management: evidence from Jordan

Almarayeh

Abdullatif

Guzmán

2022

JAEE

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“…The vital role and responsibility of audit committees in the financial and monitoring process are demonstrated in the recent literature (Alqatamin, 2018;Alzoubi, 2019;Al-Hajaya, 2019;Nazari, and Soukhakyan, 2020). These studies recommend that audit committee performance promote and develop the FRQ by way of enhancing audit quality, internal monitoring systems and communication with external auditors (Alkilani and Hussin, 2019;Shatnawi, and Eldaia, 2019).…”

Section: The Performance Of the Audit Committeementioning

confidence: 99%

The Impact of Audit Committee Performance and Composition on Financial Reporting Quality in Jordan

Alawaqleh

Almasria

2021

IJFR

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The corporate governance literature indicates efforts to investigate the role of the audit committee (AC) in improving the financial reporting quality (FRQ) after the emergence of financial scandals in many countries in the world, inclusive Jordan. To date, empirical findings are inconclusive enough to address all audit committee characteristics regarding its competency and responsibilities by employing a questionnaire to collect data about this relationship. Thus, this study measures the correlation between AC (performance and composition) and FRQ of manufacturing corporations registered on the Amman Stock Exchange (ASE). To test this impact empirically, the target population was financial managers, audit committee members, and internal audit managers who are working in manufacturing corporations listed on the (ASE). According to the coefficient (β), the independent variables (Audit Committee Performance and Audit Committee Composition influence the dependent variable FRQ. This research recommends that firms enhance the audit committee work performance and composition to ensure audit committee members effectively enhance the FRQ audit committee is a vital mechanism of the firm's corporate governance system.

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“…To minimize the effect of the expunged variables and to increase the predictive ability of the model we include several control variables (Farinha & Viana, 2009;Firth, et al, 2007). Variables such as audit firm size, audit report lag, losses and operating cash flow; prior studies have uncovered an association with modified audit opinion (Pucheta-Martínez & de Fuentes, 2007;Firth, et al, 2007;Goh, 2009;Farinha & Viana, 2009;Rahmat, Iskandar, & Saleh, 2009;Sultanoglu, Mugan, Sekerdag, & Oran, 2018;Alkilani, Hussin, & Salim, 2019a). Table 2 presents the descriptive statistics and univariate test results for (dummy) variables by audit opinion.…”

Section: Methodsmentioning

confidence: 99%

Effectiveness Score of the Board of Directors and Modified Audit Opinion: Empirical Evidence from Malaysian Publicly-Listed Companies

Omer¹,

Aljaaidi²,

Yusof³

2020

JAFEB

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The study investigates the association between the effectiveness of the board of directors and the likelihood that a company receives a modified audit opinion (as a measure of the quality of companies' external financial reporting) in Malaysia. The sample companies were extracted from the population of publicly-available information mainly the annual reports of publicly-listed companies on the Bursa Malaysia. 136 firm-year observations listed on Bursa Malaysia were identified to examine the relationship between the effectiveness of the board of directors and a modified audit opinion. Data used in this study are collected from two separate sources-annual reports and Datastream. Any missing financial figure from Datastream was acquired from the annual reports. To test the study's hypotheses, we use the pooled cross-sectional logistic regression analysis for 136 firm-year observations listed on Bursa Malaysia over the period 2009-2011. The evidence we have uncovered is consistent with the hypothesis that companies with large score of the board of directors' effectiveness are less possible to receive a modified audit opinion. Therefore, the result confirms that the combined effect of the board of directors' characteristics has a significant negative association with the likelihood of the companies receiving a modified audit opinion.

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The Influence of Audit Committee Characteristics on Modified Audit Opinion in Jordan

Cited by 11 publications

References 60 publications

The role of audit committees in mitigating earnings management: evidence from Jordan

The role of audit committees in mitigating earnings management: evidence from Jordan

The Impact of Audit Committee Performance and Composition on Financial Reporting Quality in Jordan

Effectiveness Score of the Board of Directors and Modified Audit Opinion: Empirical Evidence from Malaysian Publicly-Listed Companies

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