Board Characteristics, Audit Committee Characteristics and Abnormal Accruals

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. ABSTRACT This paper examines the relation between governance (as measured by board and audit committee characteristics) and accounting quality (as measured by abnormal accruals) in a settingwhere there is no a priori reason to suspect systematic management of earnings. Using data from Singapore and Malaysia, we fi nd both board size and audit committee independence are related to lower abnormal working capital accruals. Furthermore, the relation between audit committee independence and higher quality accounting exists only when the abnormal accruals are income increasing. This suggests that audit committees are effective in the fi nancial reporting process by reducing the level of income increasing abnormal accruals. The results also indicate that audit committees are effective only when all members are independent directors.

Audit quality and earnings management: evidence from Jordan

“…Segregating the CEO and chairman roles is likewise encouraging to produce the independence of the board (Coombes and Wong, 2004). In contradiction, stewardship theory debated that CEO-duality would consolidate the company's execution because it averts influence mitigation, lessens competition, and assorts additional clearness in the company demeanour (Bradbury et al, 2006). Furthermore, CEO duality would enable making decisions with lowest board involvement (Lin, 2005).…”

Board characteristics, external auditing quality and earnings management

“…Splitting the roles of chairman and CEO is also favorable to make the board more independent (Coombes and Wong, 2004). Proponents of stewardship theory, in contrast, argue that CEO duality enhances the firm's performance as it avoids power dilution, reduces rivalry and provides more clarity in the business conduct (Bradbury et al, 2006). In addition, CEO duality facilitates decision making with a minimum board interference (Reshner and Dalton, 1991;Lin, 2005).…”

Exploring the Role of Board Characteristics on Enhancing Financial Performance of Jordanian Listed Companies

“…This board composition is characteristic in situations in which the innovative behavior of companies is significantly improving. Bradbury et al (2006) found that a small board is more efficient in monitoring management while Yuemei and Yanxi (2007) found a negative relationship between earnings management and board size. Also, Wenyao and Qin (2008) found that small boards are more effective in constraining income-increasing earnings management than a large board.…”