Do the educational profile, gender, and professional experience of audit committee financial experts improve financial reporting quality?

Bilal,, Bushra Komal, Ernest Ezeani, Muhammad Usman, Frank Kwabi and Chengang Ye

Journal of International Accounting, Auditing and Taxation, 2023, vol. 53, issue C

Abstract: Going beyond the mere presence of the audit committee financial experts (ACFEs) within the audit committee, we examine whether the educational profile, gender, and professional experience of ACFEs reduces the extent of earnings management. Using a sample of Chinese listed companies, we find evidence suggesting that ACFEs with postgraduate qualifications and other professional certifications mitigate earnings management. Female ACFEs with postgraduate qualifications are more effective in mitigating earnings management than their male counterparts. Also, the professional experience of ACFEs helps them reduce the extent of earnings management. Results are more pronounced in the case of female ACFEs with more professional experience. In addition, we found that ACFEs working in privately-owned Chinese firms better mitigate earnings management compared to those in state-owned Chinese firms. Overall, our results remain robust after controlling for potential endogeneity problems and using alternative earnings management proxies. Our study provides implications for regulators about necessary policy reforms regarding audit committee composition and recommends that companies appoint female ACFEs in China.

Keywords: Audit Committee Financial Experts; Corporate Governance; Education Profile; Financial Reporting Quality; Gender; Professional Experience (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:53:y:2023:i:c:s1061951823000599

DOI: 10.1016/j.intaccaudtax.2023.100580

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