Former auditors on the audit committee and earnings management: Evidence from African banks

Yosra Mnif and Imen Slimi

Accounting and Finance, 2023, vol. 63, issue 2, 2383-2420

Abstract: This paper investigates whether former auditors on the audit committee constrain earnings management through loan loss provisions. Based on an analysis of the annual reports of 82 African listed banks over the period 2011–2016, findings show that the presence of former auditors on an audit committee is associated with lower earnings management. This result suggests that audit committee members with auditing expertise and background contribute to effective monitoring of management’s accounting practices. Furthermore, results reveal that the reducing effect on earnings management of former auditors is strongest for directors who are unaffiliated with the bank’s current external auditor.

Date: 2023
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https://doi.org/10.1111/acfi.12973

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