Corporate Governance: Earnings Management Linkages: Impact of Audit Committee Composition and Operational Characteristics

Publication Type

Journal Article

Publication Date

2004

Abstract

Our study documents a comprehensive simultaneous analysis of the association between five-audit committee composition and operational characteristics features and earnings management based on a sample of 485 organisational-years of Singapore publicly traded organisations. Findings provide only partition support for the view organisations with a higher proportion of independent audit committee members are more effective at constraining earnings management. Organisations with audit committees that are more diligent and/or lack the presence of independent directors serving simultaneously on a substantial number of boards and committees are more effective at constraining earnings management. Audit committee expertise and the presence of a senior executive director on the committee do not appear to influence the committee's ability to constrain earnings management. Our findings are robust to alternative income-incentives facing corporate management and entices associated with different levels of ownership concentration. Overall, our findings are rich with policy and practical implications.

Keywords

earnings management, audit committees, ownership concentration, income-earnings incentives, Singapore, corporate governance, audit committee composition, audit committee membership

Discipline

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

International Journal of Accounting, Auditing and Performance Evaluation

Volume

1

Issue

4

First Page

401

Last Page

431

ISSN

1740-8008

Identifier

10.1504/ijaape.2004.006354

Publisher

Inderscience Publishers

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