The Impact of Ownership Types on the Value of Discretionary Accruals: What is the Role of Audit Committee? Evidence from Pakistan

Sattar Khan, Yasir Kamal, Azhar Khan, Arif Hussain, Rafiq Muhammad, Maryam Bibi, Syed Fahad Ali Shah, Zahir Shah and Muhammad Khan
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Sattar Khan: Department of Management Sciences, Institute of Management Sciences Peshawar, Pakistan,
Yasir Kamal: Department of Management Sciences, Institute of Management Sciences Peshawar, Pakistan,
Azhar Khan: Department of Management Science, Islamia College Peshawar, Pakistan,
Arif Hussain: Institute of Business Studies and Leadership, Abdul Wali Khan University Mardan, Pakistan,
Maryam Bibi: Department of Management Sciences, Abasyn University Peshawar, Pakistan,
Syed Fahad Ali Shah: Department of Economics, University of Chitral, Pakistan,
Zahir Shah: Department of Business Administration, Yeungnam University, South Korea.
Muhammad Khan: Institute of Business Studies and Leadership, Abdul Wali Khan University Mardan, Pakistan,

International Journal of Economics and Financial Issues, 2020, vol. 10, issue 4, 141-150

Abstract: The research paper attempts to investigate the connection between Ownership Structure and Audit Committee Effectiveness on discretionary accruals in Pakistan. This study analyzed 5 years of data over the period of 2013 to 2017 of 169 listed firms of the Pakistan Stock Exchanges (PSX). The data is panel and it is analyzed with the fixed-effect regression to check the association between ownership structure and audit committee effectiveness on discretionary accruals. The findings of this article show that the effectiveness of an audit committee is very instrumental in bringing down the value of discretionary accruals. This paper confirms the view that audit committee effectiveness mitigates discretionary accruals in PSX listed firms, Furthermore, this study found no clue that blocks ownership, management ownership, foreign ownership and institutional ownership constrain discretionary accruals. To the best of researchers knowledge, this empirical study is first of its kind in Pakistan. The present research study recommended and supports the recent amendment in Pakistan Corporate Governance Code about audit committee independence and expertise for reducing discretionary accruals.

Keywords: Ownership Types; Audit Committee Effectiveness; Corporate Governance; Discretionary Accruals; Pakistan Stock Exchange (search for similar items in EconPapers)
JEL-codes: G34 M4 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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