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The effect of audit committee financial experts on earnings management

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  • Anis Ben Amar

Abstract

Using data for 1996-2000, Yang and Krishnan found no significant association between either audit committee's independence or audit committee's financial expertise and quarterly discretionary accruals. This study examines the effect of audit committee financial experts on earnings management. Using a sample of 425 firm-year observations for the years 2001-2005, we find that an audit committee consisting mostly of independent financial expert directors seems to have a negative and significant effect on discretionary accruals. We interpret our evidence as follows. It is not enough to have an audit committee that satisfies the financial expertise requirements. These results suggest several important implications for the regulators of certain countries intending to improve the characteristics of audit committees.

Suggested Citation

  • Anis Ben Amar, 2014. "The effect of audit committee financial experts on earnings management," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 6(2), pages 156-166.
    • Handle: RePEc:ids:injmfa:v:6:y:2014:i:2:p:156-166
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    Cited by:

    1. Anis Ben Amar & Mohamed Chabchoub, 2016. "Audit Quality and Earnings Management to Avoid Losses and Earnings Decreases: The French Case," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(4), pages 20-27, October.
    2. Habib Jouber, 2016. "The relationship between CEO performance-based compensation and shareholders value creation: a cross national analysis," International Journal of Managerial and Financial Accounting, Inderscience Enterprises Ltd, vol. 8(1), pages 1-22.

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