Audit committee and audit quality: An empirical analysis considering industry expertise, legal expertise and gender diversity

Salem Alhababsah and Sina Yekini

Journal of International Accounting, Auditing and Taxation, 2021, vol. 42, issue C

Abstract: The extant literature and corporate governance regulations suffer from a tight focus on audit committee (AC) financial expertise as a mean of improving the AC’s oversight role. However, there is a lack of evidence about other kinds of expertise that might be important for AC effectiveness which could contribute to the quality of financial statements. This study examines whether AC industry expertise and AC legal expertise have an impact on audit quality in a developing country (Jordan). Furthermore, mixed and inconsistent findings regarding the role played by female directors and the peculiarity of the Jordanian context creates a motive to examine the effect of AC gender diversity on audit quality. By utilizing 1,035 firm-year observations, using two proxies to capture audit quality, and employing different estimation methods, this study highlights the importance of AC industry expertise in ensuring high audit quality. AC legal expertise and AC gender diversity have no significant effect on audit quality. This study offers a valuable contribution to the literature, and also has implications for policy-makers in Jordan and other countries with similar institutional environments to consider for future regulatory reform.

Keywords: Audit committee; Audit quality; Industry experts; Legal expertise; Gender diversity; Jordan (search for similar items in EconPapers)
JEL-codes: G34 M41 M42 N45 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:42:y:2021:i:c:s1061951821000021

DOI: 10.1016/j.intaccaudtax.2021.100377

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