The Role of the Audit Committee in Moderating the Negative Effect of Non-Audit Services on Earnings Quality

Kamarudin, Khairul Anuar; Ismail, Wan Adibah Wan; Samsuddin, Mas Ervina

doi:10.2139/ssrn.2051258

Cited by 4 publications

(6 citation statements)

References 34 publications

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“…The higher the error indicated, the lower earnings quality, resulting in a negative relationship between NAS and earnings quality. This result is consistent with prior research that NAS affect auditor independence (Gul et al , 2006; Hay et al , 2006; Srinidhi and Gul, 2007; Kamarudin et al , 2012b; Blay and Geiger, 2013; Meuwissen and Quick, 2019; Abdul Wahab et al , 2020).…”

Section: Resultssupporting

confidence: 92%

Nonaudit services, audit committee characteristics and accruals quality in Malaysia

Majid

Wahab

Hasnah

et al. 2021

AJAR

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PurposeThe study examines the relationship between nonaudit services (NAS) and accruals quality in Malaysia. The study also considers several important characteristics of audit committee as the determinant for accruals quality. Next, the study examines whether these characteristics mitigate the relationship between NAS and accruals quality.Design/methodology/approachThe study employs descriptive analysis, univariate tests and multivariate regression to investigate the potential effect of NAS on acruals quality. Data for audit committee characteristics were hand collected from annual reports downloaded from Bursa Malaysia's website.FindingsBased on 1,118 firm-year observations for the period 2009–2011, the study finds that NAS negatively impact accruals quality. This empirical result indicates that the economic bond that is created between auditors and clients restricts the auditors from performing their duty objectively. A fully independent audit committee weakens the negative relationship between NAS and auditor independence.Research limitations/implicationsThe sample period represents a limitation since it only covers three years of data. This limitation is largely driven by the nature of data collection of NAS fees.Practical implicationsThese results contribute to Malaysia's policy deliberation to account for the effects of NAS on auditor independence and the oversight role of an audit committee. This study contributes to theoretical perspectives on accruals quality and corporate governance in Malaysia.Originality/valueThe novelty of this research, coupled with institutional data in Malaysia, claims the originality of this research.

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Section: Resultssupporting

confidence: 92%

Nonaudit services, audit committee characteristics and accruals quality in Malaysia

Majid

Wahab

Hasnah

et al. 2021

AJAR

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“…Extent studies has examined factors determining the inclusion of sustainability reporting in corporate reports (Bear et al, 2010;Da Silva Monteiro & Aibar-Guzmán, 2010;Gallo & Christensen, 2011;Möller & Verbeeten, 2011;Dah & Jizi, 2016;Chang & McIlkenny, 2017;Anazonwu et al, 2018;Dissanayake et al, 2019;Kamarudin et al, 2012). The studies argue that factors such as the size of the company, corporate governance factors, and the intrinsic motivation of the management are among elements that influence the decision to implement the sustainable reporting.…”

Section: Studies On Sustainability Reportingmentioning

confidence: 99%

Corporate Sustainability Reporting and Firm’s Financial Performance in Emerging Markets

Ismail¹,

Saad²,

Lode³

et al. 2022

IJARBSS

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“…Therefore, this variable is measured with 6 items as adapted with some modification (Davies, 2009;Kamarudin et al 2012;Sarens et al, 2009). …”

Section: Dependent Variablementioning

confidence: 99%

“…Even the limited study that focus on such moderating effect of effective audit committee give concentration to such moderating effect on earnings management (Bukit & Iskandar, 2009;Kamarudin et al, 2012;Krishnamoorthy 2008;Sharma et al, 2011). Thereby ignoring to study the moderating effect of such audit committee within the context of public sector, while concerned has been given that future research should pay maximum consideration on the operation of audit committee in the organizational and institutional contexts and its interaction with other internal structures of an entity, in fact it should be primary subject of future research (Akarak & Ussahawanitchakit, 2010;Mat Zain, et al, 2006;Turley & Zaman, 2004;Turley & Zaman 2007).…”

Section: Introductionmentioning

confidence: 99%

Empirical Evidence of the Moderating Effect of Effective Audit Committee on Audit Experience in the Public Sector: Perception of Internal Auditors

Badara¹,

Saidin²

2014

MJSS

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Researches that focus on the moderating effect of effective audit committee within the public sector setting are very scanty or no attention has been given at all. Therefore, the objective of this study is to empirically examine the moderating effective of effective audit committee on the relationship between audit experience and internal audit effectiveness in the public sector using the perception of internal auditors.

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The Role of the Audit Committee in Moderating the Negative Effect of Non-Audit Services on Earnings Quality

Cited by 4 publications

References 34 publications

Nonaudit services, audit committee characteristics and accruals quality in Malaysia

Nonaudit services, audit committee characteristics and accruals quality in Malaysia

Corporate Sustainability Reporting and Firm’s Financial Performance in Emerging Markets

Empirical Evidence of the Moderating Effect of Effective Audit Committee on Audit Experience in the Public Sector: Perception of Internal Auditors

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