The Impact of Audit Committee Effectiveness on Audit Quality: Evidence From the Middle East

Abstract

This study examines the effect of the characteristics of the audit committee, as a tool of corporate governance, on audit quality (as measured by audit fees and type of audit agent) among insurance companies listed on the Amman Stock Exchange, Jordan. The empirical study was conducted on data of all 23 listed insurance companies for the period 2013-2017, resulting in 115 observations. Findings of multivariate analyses indicate that companies with larger audit committees and containing a high proportion of non-executive and independent directors are more likely to incur higher audit fees and hire big four audit agents, signalling their prominent level of audit quality. In contrast, more diligent audit committees are more likely to select non-big four auditing firms requiring lower audit fees. The study contributes to the existing body of literature by focusing on the role of the audit committee in enhancing audit quality, especially where there is a lack of such study in emerging economies, especially in the Middle East. The findings of the current study could be useful for regulators and policy makers in the Middle East and Arab region, particularly when they are about to review and set guidelines for effective audit committee characteristics.

Audit Committee Characteristics and Audit Efficiency: Evidence from Nigerian Listed Deposit Money Banks

“…The result indicates that outside directors are painstaking in the recommendation of appointment and remuneration of the external auditors with higher reputations. The result is tandem with studies (Abbott, et al, 2003;Al-Hajaya et al, 2019;Larasati et al, 2019;Lifschutz et al, 2010) The female members (ACFE) were negatively associated with the audit fee at a 5 per cent level of significance, evidenced by statistics of (coff= -0.10, t= -7.08). The finding is in line with the dependence theory as the female members are conservative in nature; the result is in tandem with studies (Ittonen et al, 2010;Nekhili et al, 2020;Xiang et al, 2015) but contradicted (Miglani & Ahmed, 2019) Moreover, Table 4 shows the association between audit committee effectiveness and audit efficiency measured by audit delay in columns III and IV.…”

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

“…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).…”

Determinants of Audit Quality: The Effect of Ownership Structure and Audit Committee Activities

“…One of the audit committee's activities is holding meetings between committee members. An audit committee that is active in conducting meetings is considered active and has a broad reach in carrying out its role to improve the quality of internal control (Al-Hajaya, 2019). In OJK regulations, it is stated that at least once for three months, the audit committee must hold a meeting or meetings.…”