IDEAS home Printed from https://ideas.repec.org/a/ibn/ijbmjn/v13y2021i12p31.html
   My bibliography  Save this article

The Moderating Role of Family Control on the Relationship between Audit Committee Financial Expertise and Earnings Management

Author

Listed:
  • Yousef Abu Siam
  • Mohammed Idris
  • Saleh Al- Okdeh

Abstract

The current study offers empirical evidence on the way the family ownership moderates the association that exists between the financial experience of the audit committee and earnings management based on a sample of 44 manufacturing firms that are registered with the Amman Stock Exchange (ASE) from 2012 to 2016. From the results of the study, there is a significant negative association between the financial experience of the audit committee and earnings management. In addition, the study shows a positive interaction of the financial experience of the audit committee and the family ownership on earnings management. This indicates that an increase in the percentage of audit committee members having financial expertise, in order to restrict earnings management, is less likely to be influential in the case of family controlled firms. These results have implications for policy makers and regulatory bodies in Jordan since they highlight the need to improve the good corporate governance practices and attempt to constrain the incidence of earnings management in Jordanian firms.

Suggested Citation

  • Yousef Abu Siam & Mohammed Idris & Saleh Al- Okdeh, 2021. "The Moderating Role of Family Control on the Relationship between Audit Committee Financial Expertise and Earnings Management," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(12), pages 1-31, July.
    • Handle: RePEc:ibn:ijbmjn:v:13:y:2021:i:12:p:31
    as

    Download full text from publisher

    File URL: http://www.ccsenet.org/journal/index.php/ijbm/article/download/0/0/37421/37719
    Download Restriction: no
    File URL: http://www.ccsenet.org/journal/index.php/ijbm/article/view/0/37421
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Xie, Biao & Davidson, Wallace III & DaDalt, Peter J., 2003. "Earnings management and corporate governance: the role of the board and the audit committee," Journal of Corporate Finance, Elsevier, vol. 9(3), pages 295-316, June.
    2. Arun, Thankom Gopinath & Almahrog, Yousf Ebrahem & Ali Aribi, Zakaria, 2015. "Female directors and earnings management: Evidence from UK companies," International Review of Financial Analysis, Elsevier, vol. 39(C), pages 137-146.
    3. Bilal, & Chen, Songsheng & Komal, Bushra, 2018. "Audit committee financial expertise and earnings quality: A meta-analysis," Journal of Business Research, Elsevier, vol. 84(C), pages 253-270.
    4. Beng Wee Goh, 2009. "Audit Committees, Boards of Directors, and Remediation of Material Weaknesses in Internal Control," Contemporary Accounting Research, John Wiley & Sons, vol. 26(2), pages 549-579, June.
    5. Ibadin L. Ayemere Ph.D & Afensimi Elijah, 2015. "Audit Committee Attributes and Earnings Management: Evidence from Nigeria," International Journal of Business and Social Research, LAR Center Press, vol. 5(4), pages 14-23, April.
    6. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    7. Jaggi, Bikki & Leung, Sidney & Gul, Ferdinand, 2009. "Family control, board independence and earnings management: Evidence based on Hong Kong firms," Journal of Accounting and Public Policy, Elsevier, vol. 28(4), pages 281-300, July.
    8. Norman Mohd Saleh & Takiah Mohd Iskandar & Mohd Mohid Rahmat, 2007. "Audit committee characteristics and earnings management: evidence from Malaysia," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 15(2), pages 147-163, April.
    9. Dechun Wang, 2006. "Founding Family Ownership and Earnings Quality," Journal of Accounting Research, Wiley Blackwell, vol. 44(3), pages 619-656, June.
    10. Agrawal, Anup & Chadha, Sahiba, 2005. "Corporate Governance and Accounting Scandals," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 371-406, October.
    11. Ibadin L. Ayemere Ph.D & Afensimi Elijah, 2015. "Audit Committee Attributes and Earnings Management: Evidence from Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(4), pages 14-23, April.
    12. Zalata, Alaa Mansour & Tauringana, Venancio & Tingbani, Ishmael, 2018. "Audit committee financial expertise, gender, and earnings management: Does gender of the financial expert matter?," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 170-183.
    13. Kothari, S.P. & Leone, Andrew J. & Wasley, Charles E., 2005. "Performance matched discretionary accrual measures," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 163-197, February.
    14. Richardson, Vernon J, 2000. "Information Asymmetry and Earnings Management: Some Evidence," Review of Quantitative Finance and Accounting, Springer, vol. 15(4), pages 325-347, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elisabete F. Simões Vieira, 2016. "Earnings Management in Public Family Firms under Economic Adversity," Australian Accounting Review, CPA Australia, vol. 26(2), pages 190-207, June.
    2. Bilal, & Chen, Songsheng & Komal, Bushra, 2018. "Audit committee financial expertise and earnings quality: A meta-analysis," Journal of Business Research, Elsevier, vol. 84(C), pages 253-270.
    3. Sandeep Goel & Nimisha Kapoor, 2022. "Is earnings management related to board independence and gender diversity? Sector-wise evidence from India," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(4), pages 363-373, December.
    4. Abbasi, Kaleemullah & Alam, Ashraful & Bhuiyan, Md. Borhan Uddin, 2020. "Audit committees, female directors and the types of female and male financial experts: Further evidence," Journal of Business Research, Elsevier, vol. 114(C), pages 186-197.
    5. Gul, Ferdinand A. & Cheng, Louis T.W. & Leung, T.Y., 2011. "Perks and the informativeness of stock prices in the Chinese market," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1410-1429.
    6. Hidaya Lawati & Khaled Hussainey & Roza Sagitova, 2021. "Disclosure quality vis-à-vis disclosure quantity: Does audit committee matter in Omani financial institutions?," Review of Quantitative Finance and Accounting, Springer, vol. 57(2), pages 557-594, August.
    7. Giovanna Gavana & Pietro Gottardo & Anna Maria Moisello, 2019. "What Form of Visibility Affects Earnings Management? Evidence from Italian Family and Non-Family Firms," Administrative Sciences, MDPI, vol. 9(1), pages 1-14, March.
    8. Ruqia Shaikh & Guo Fei & Muhammad Shaique & Muhammad Rizwan Nazir, 2019. "Control-Enhancing Mechanisms and Earnings Management: Empirical Evidence from Pakistan," JRFM, MDPI, vol. 12(3), pages 1-23, August.
    9. Gull, Ammar Ali & Nekhili, Mehdi & Nagati, Haithem & Chtioui, Tawhid, 2018. "Beyond gender diversity: How specific attributes of female directors affect earnings management," The British Accounting Review, Elsevier, vol. 50(3), pages 255-274.
    10. Yusuf Babatunde Adeneye & Setareh Fasihi & Ines Kammoun & Khaldoon Albitar, 2024. "Does earnings management constrain ESG performance? The role of corporate governance," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 69-92, March.
    11. Ahsan Habib & Md. Borhan Uddin Bhuiyan, 2016. "Problem directors on the audit committee and financial reporting quality," Accounting and Business Research, Taylor & Francis Journals, vol. 46(2), pages 121-144, February.
    12. Hussein A. Abdou & Nouran N. Ellelly & Ahmed A. Elamer & Khaled Hussainey & Hassan Yazdifar, 2021. "Corporate governance and earnings management nexus: Evidence from the UK and Egypt using neural networks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6281-6311, October.
    13. Yves Mard & Sylvain Marsat, 2011. "Gestion des résultats comptables et structure de l'actionnariat : le cas français," Post-Print hal-00650550, HAL.
    14. Woidtke, Tracie & Yeh, Yin-Hua, 2013. "The role of the audit committee and the informativeness of accounting earnings in East Asia," Pacific-Basin Finance Journal, Elsevier, vol. 23(C), pages 1-24.
    15. Eman F. Attia & Tariq H. Ismail & Messaoud Mehafdi, 2022. "Impact of board of directors attributes on real-based earnings management: further evidence from Egypt," Future Business Journal, Springer, vol. 8(1), pages 1-22, December.
    16. Chen, Ruiyuan (Ryan) & Liu, Feiyu (Andy) & Zhao, Chen, 2024. "Worldwide board reforms and financial reporting quality," Research in International Business and Finance, Elsevier, vol. 69(C).
    17. Yves Mard & Sylvain Marsat, 2012. "Earnings management and ownership structure: Evidence from France [Gestion des résultats comptables et structure de l'actionnariat : le cas français]," Post-Print hal-02156592, HAL.
    18. Setia-Atmaja, Lukas & Haman, Janto & Tanewski, George, 2011. "The role of board independence in mitigating agency problem II in Australian family firms," The British Accounting Review, Elsevier, vol. 43(3), pages 230-246.
    19. Jara-Bertin, Mauricio & López-Iturriaga, Félix J., 2008. "Earnings Management and Contest to the Control: An Analysis of European Family Firms," MPRA Paper 9660, University Library of Munich, Germany.
    20. Razzaque, Rushdi M.R. & Ali, Muhammad Jahangir & Mather, Paul, 2020. "Corporate governance reform and family firms: Evidence from an emerging economy," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijbmjn:v:13:y:2021:i:12:p:31. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.