e-journal

Audit committee characteristics and earnings management: evidence from Malaysia

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Purpose – Conflicts between managers and outside auditors may exist in choosing alternative
accounting procedures. Since auditors are appointed by the firm, they are subject to dismissal if
divergent opinions cannot be resolved. To a lesser extent, financial reports are often negotiated. In
order to produce unbiased financial reports, audit committee members are appointed to act
independently in order to resolve conflicts between the managers and outside auditors. This study
aims to assess the effectiveness of some audit committee characteristics, i.e. the independence of
members, size, frequency of meeting and knowledge of the members, to monitor management behavior
with respect to their incentives to manage earnings.
Design/methodology/approach – This paper uses discretionary accruals obtained from the
established model as a signal of the presence of earnings management.
Findings – The evidence shows that the presence of a fully independent audit committee reduces
earnings management practices. It was also found that firms which had more knowledgeable audit
committee members and held more audit committee meetings recorded fewer earnings management
practices compared with other firms.
Originality/value – This paper is different from prior studies, in that it makes a significant
contribution towards enhancing one’s knowledge in the interacting role of audit committee
characteristics.

Keywords Earnings, Audit committees, Accounting procedures, Malaysia

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Ketersediaan

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Informasi Detail

Judul Seri

Asian Review of Accounting

No. Panggil

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Penerbit

: Emerald Group., 2007

Deskripsi Fisik

Asian Review of Accounting Vol. 15 No. 2, 2007 pp. 147-163

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

Lampiran Berkas

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